Trump’s tariffs have Chinese-American businesses feeling squeezed
As U.S. President Donald Trump trades tariff threats with Beijing, Chinese-American business owners in California say they’re feeling squeezed. Importer Taylor Chao says that pain will be passed on to the restaurants and retailers that he sells ingredients to.
Ultra-popular fast fashion websites Shein and Temu are facing resistance in the United States as the trade war between the U.S. and China continues to escalate.
Known for selling products ranging from clothes to furniture at cheap prices, Shein and Temu have attracted American shoppers looking to place large orders for remarkably low costs and often free shipping.
The popularity of these sites and similar inexpensive Chinese-based manufacturers and sellers is largely credited for bumping Chinese exports of low-value packages to $66 billion in 2023, a huge uptick from $5.3 billion in 2018, according to a February report by the Congressional Research Service. A large portion of these were to the U.S., and in 2023, Shein and Temu together accounted for 17% of the U.S. discount market, according to the same report.
President Donald Trump on Wednesday imposed a total tariff rate of 125% on Chinese imports while putting a 90-day hold on other countries. China was set to tax U.S. products at 84% starting Thursday, Chinese officials announced. The escalating trade tensions have prompted turmoil in the stock market as people feared inflation and a possible recession.
With such a large portion of American imports coming from China, U.S. consumers are bracing to see rising prices, including in their once-cheap fast fashion orders.
Here’s how Temu and Shein could be impacted by Trump’s trade policies, when it could start, and how customers could be affected.
What is ‘de minimis’ and what does it have to do with Temu and Shein?
The de minimis exemption refers to Section 321 of the Tariff Act of 1930 and allows the Secretary of the Treasury to waive some duties or fees where it is more inconvenient to collect the tax than the revenue would actually be worth.
In other words, it is a trade loophole that allows for low-value goods to be shipped to the country duty-free.
Over half of all packages with de minimis exemptions come from China, and more than 30% of all daily packages shipped under de minimis are from Temu and Shein, Reuters reported.
The de minimis exemption was introduced in 1938 to reduce duties, fees, and other taxes on certain imported goods with a value of $1 or less, before the threshold was raised to $8 in 1978, $200 in 1993 and $800 in 2015.
Shein and Temu orders no longer enjoy trade loophole May 2
The de minimis exemption on products from China is set to end at midnight on May 1.
Postal packages from China valued at under $800 will then be taxed at 90% of their value or $75 per item, which is scheduled to increase to $150 per item after June 1, the White House announced Tuesday. The White House did not immediately respond to a request for comment on whether the Wednesday hike on Chinese tariffs would further impact the de minimis rates.
Although China faced rising tariff rates on exports to the U.S. ahead of what Trump billed as “Liberation Day,” packages valued under $800 were able to come in duty-free thanks to the de minimis exemption.
Trump closed the de minimis loophole in the early days of his administration, before re-opening it in early February due to a collection system not yet being in place. On April 2, Trump announced proper protocol was in place to collect revenue on small-value packages sent through the international postal network.
Prices, shipping may be impacted
Experts have previously said closing the de minimis loophole could lead to higher prices and longer shipping times on products from e-commerce companies like Shein and Temu, Reuters reported.
Carriers transporting de minimis items, such as commercial mail agencies UPS and FedEx, must report shipment details to U.S. Customs and Border Protection (CBP), the White House said April 2. This is likely to lead to delivery delays on cheap items, Marketplace Pulse founder Juozas Kaziukenas previously told the Associated Press.
However, impacted companies could adapt. Shein and Temu have started sourcing some products from outside of China as well as building warehouses in the U.S., Reuters reported, which could potentially be leveraged to their benefit if tariffs continue.
Hilton Beckham, an assistant commissioner of the CBP, told the Associated Press the agency would be ready for the change.
“Our automated systems are fully updated to capture, assess, and administer all new duties, and clear guidance will be provided to support uniform enforcement across the nation,” Beckham said.
A representative for FedEx likewise told AP that it would support its customers in adapting to the new regulations and that it would have “paperwork completed correctly ahead of pick-up” for shipments to move smoothly.
Contributing: Reuters
