The era of cheap “fast fashion” might be over. President Donald Trump’s new tariffs on China will make purchases from Shein and Temu more expensive — and that’s if the shipments can even get into the United States.
Trump’s China tariffs include the revocation of a “century-old tax loophole” that had canceled out “tens of billions of dollars in fees on imports,” said The Washington Post. That loophole — known as “de minimis” — skipped import taxes on shipments worth less than $800. The online shopping era made the loophole popular with “everyone from Etsy sellers and family-run footwear companies.” Most of those imports come from China, home to popular online outlets like Shein and Temu, which are “responsible for an estimated 30% of packages shipped daily into the United States,” said the Post. Without de minimis, prices on those shipments “could go up an average of 30%.”
The new rules apparently discombobulated the U.S. Postal Service. Postal officials on Tuesday announced a halt on accepting packages from China and Hong Kong — but then reversed course on Wednesday morning, said The New York Times. Even if the packages are still allowed to proceed, though, the new tariffs could “derail online shopping in the U.S.,” said Fast Company.
How will U.S. customers be affected?
American shoppers are worried the new tariffs “will get in the way of their retail therapy,” said The Guardian. “What’s the point of living in a country if I can’t order 100 pieces of junk for $15?” said Vivi Armacost, who uses Temu to buy supplies for her purse-making hobby. But a $1 pack of T-shirts from Temu might now become a $2 pack, which is still pretty cheap, and some observers think the changing landscape could even strengthen fast fashion’s hold on U.S. consumers. The bigger concern is that “small and medium-sized enterprises won’t survive, or will face significant challenges,” said Sheng Lu, a fashion professor at the University of Delaware.
Trump’s action is a “big threat to little shipments,” said The Wall Street Journal. Ending de minimis will put a strain on the government: Customs and Border Protection will have to spend about $5 per package to treat small shipments “like other imports.” That adds up. The new requirements will result in “hundreds of millions of dollars in costs to the government, requiring thousands more customs officers.”
What does this mean for American businesses?
The crackdown will hurt Shein and Temu, but will “help Amazon,” said the Financial Times. The American company has sought to fend off its Chinese competition by creating Amazon Haul, which features products that sell for under $20. The end of de minimis is “favorable to Amazon,” said Andy Wu, an assistant business professor at Harvard University. But another American tech giant — Meta — could be hurt. The tariffs could drive Chinese advertisers to “pull back on spending” on Meta’s Facebook and Instagram platforms, said Investor’s Business Daily. That, one analyst said, would be a “negative for ad platforms.”