Shane and Temu face the costs of adapting to new U.S. tariffs – The repeal of the “de minimis” rule for China and Trump’s additional duties are changing the map for fast fashion companies Shane and Temu
Analysts say U.S. duties on Chinese imports will disrupt the business models of e-commerce giants Shein and Temu, with consumers likely to bear the brunt of the costs.
Offering a huge selection of extremely affordable goods at a time when inflation has reduced the purchasing power of households virtually across the planet, Shein and Temu have become a global phenomenon.
Both companies ship tens of billions of dollars worth of clothing, appliances and other goods annually from their vast network of factories in China, with the U.S. being their most important market.
Over the weekend, however, U.S. President Donald Trump imposed additional 10 percent duties on all Chinese imports and eliminated tax breaks for goods worth less than $800.
Before Trump’s announcement, the system allowed “Chinese exporters to deliver small parcels at a low cost, which directly led to lower prices for US consumers,” Jimmy Xu of Peking University told AFP news agency.
“Disrupting this system would increase shipping costs, leading to either higher retail prices or lower profits – both of which could dramatically change the business models of these platforms,” he added.
Last Tuesday, it looked like the damage might worsen when the U.S. Postal Service announced it would suspend all packages from China and Hong Kong due to the new tariffs, but it backtracked the next day.
However, the loss of the $800 “de minimis” exemption means that e-commerce businesses will now face import duties, potentially more frequent inspections and the need to comply with regulations on issues such as food safety and national security.
According to Nomura, $46 billion worth of small shipments will be moved in the U.S. in 2024 under the “de minimis” exception.
E-commerce expert Laetitia Lamari told AFP news agency that 20-30% of Temu’s sales come from the US, while Shein gets 30-40% of its revenues from that country.
Source: CNA
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