Shein, Temu Face Cost Of Adapting To New US Customs Rules

US tariffs on Chinese imports and the closing of a customs loophole will wreak disruption on the business models of e-commerce giants Shein and Temu, with consumers potentially bearing the brunt of the cost, analysts say

Shanghai, (UrduPoint / Pakistan Point News - 6th Feb, 2025) US tariffs on Chinese imports and the closing of a customs loophole will wreak disruption on the business models of e-commerce giants Shein and Temu, with consumers potentially bearing the brunt of the cost, analysts say.

Boasting an enormous selection of ultra-cheap items at a time when inflation has shrunk household spending power almost everywhere, Shein and Temu have become a global phenomenon.

The companies send out tens of billions of Dollars worth of clothes, gadgets and other items from their vast network of factories in China annually -- with the United States a crucial market.

But over the weekend US President Donald Trump introduced additional levies of 10 percent on all Chinese imports, and scrapped a customs exemption for goods valued under $800.

Before Trump's announcement, the system allowed "Chinese exporters to deliver small parcels at low costs, a benefit that has translated directly into lower prices for US consumers," Peking University's Mingzhi Jimmy Xu told AFP.

"Disrupting this system would impose higher shipping costs, leading to either higher retail prices or lower profit margins -- both of which could fundamentally alter the business models of these platforms."

On Tuesday it seemed the damage could worsen when the US Postal Service announced it would suspend all parcels from China and Hong Kong in light of the tariffs -- only to backtrack the next day.

But losing the $800 "de minimis" exemption means e-commerce firms now face import duties, potentially more frequent inspections, and the need to meet regulations on issues like food safety and national security.

Some items previously imported under the exemption might never have been allowed to enter the United States at all if they had had to follow these standards, Nomura analysts said.

Trouble could be ahead elsewhere, too -- on Wednesday the European Commission announced it would seek to impose new fees on e-commerce imports, though it said its actions were not coordinated with Washington.