The Biden administration is taking steps to impose more stringent import fees on Chinese goods, a move expected to impact popular e-commerce sites like Shein and Temu. The administration announced plans to address the widespread abuse of a trade law that allows many imports to bypass taxes and tariffs. This law, known as the “de minimis provision,” currently lets U.S. consumers avoid import fees on direct-to-consumer shipments valued at less than $800.
A House Select Committee report estimated that over 30% of packages shipped under this provision are from Shein and Temu. The new rule proposal aims to eliminate this exemption for many Chinese imports, including clothing, increasing American shoppers’ prices. For instance, a $40 purchase on Shein or Temu could increase to about $50 once new import fees are imposed, representing a roughly 25% hike.
Chad Schofield, cofounder of the e-commerce logistics management platform BoxC, estimated that 40% to 45% of Shein and Temu’s U.S. customers are Gen Z. Schofield warned that this group might react strongly to price increases. The import fees could vary by product, ranging between 15% and 20%, according to Juozas Kaziukėnas, founder of the e-commerce intelligence firm Marketplace Pulse.
The proposal is part of a broader effort by the Biden administration to protect American businesses and reduce dependency on Chinese imports.
Biden administration’s new import fees
U.S. customs inspections have struggled with the dramatic rise in de minimis shipments, which have grown from 140 million to nearly one billion annually over the past decade.
Though the proposal did not specifically mention Shein or Temu, experts believe these companies are likely targets due to their significant impact on U.S. markets with low-cost imports. The administration also plans to target other Chinese imports, such as solar cells and semiconductors, with new tariffs. The proposed changes could affect Shein and Temu and smaller U.S. businesses that rely on direct-to-consumer imports from China.
These entities may face challenges adapting to the new regulations compared to larger firms with more resources to warehouse goods in the U.S.
Shein and Temu might adjust their strategies in light of these potential changes. They could offset some import fees by subsidizing costs or increasing warehouse storage in the U.S., thus reducing the impact of direct-to-consumer shipping fees. Shifting some operations to Canada or Mexico could also be a tactic to bypass impending import fees, although this would require significant alterations to their current business models.
The proposal is subject to a public comment period and potential industry lobbying, so it may not take effect for at least 18 months. This timeline means that the final outcome will likely depend on political shifts, including the results of the next presidential election. For now, businesses and consumers alike watch closely, as any changes to the de minimis provision could significantly alter the landscape of e-commerce and international trade.
