Biden admin targets Shein and Temu with new shipping rules

The Biden administration proposed new rules on Friday to reduce duty-free low-value shipments entering the US. This could potentially affect retailers Shein and Temu, known for shipping inexpensive clothes and home goods from China.

The rules aim to force fast-fashion retailers to pay import taxes on goods shipped to the US for the first time. These companies have been using a tax loophole.

The “de minimis” loophole, which both companies currently benefit from, allows packages under $800 to bypass import fees. This way, Shein and Temu have saved millions of dollars on import fees. Instead of bulk shipments to US warehouses, they ship individual low-priced orders directly to US customers from Chinese factories.

Massive increase in package shipments 
In 2022, over one billion duty-free shipments entered the US through this exemption—up from 140 million a decade ago—driven by Chinese e-commerce firms.

Retail giants respond to proposed changes
Shein, which sells clothes as cheap as $5, and Temu, which offers items starting at $15, argue that the loophole isn’t essential to their success, crediting their rapid growth in the US market to 

direct-to-consumer models.

Shein’s sales grew 100% in 2022, while Temu, launched the same year, quickly became one of the fastest-growing US retailers. 

Meanwhile, Congress is also considering changes to the import tax exemption.