They’ve been major headaches for both American retailers and the traditional vendors who supply them but recent signs could be indicating that Shein and Temu may be peaking. The two Chinese-founded websites that specialize in low-cost apparel, fashion accessories, and home décor that skirts import duties under what had been an obscure federal regulation are believed to be doing billions of dollars of business, especially with younger millennial, Gen Z, and even the emerging Zoomer shoppers looking for fast, cheap fashion.
But the tide may be turning. This summer Senate Finance Committee Chairman Ron Wyden (D-OR), and Senators Sherrod Brown (D-OH), Bob Casey (D-PA), Susan Collins (R-ME) and Cynthia Lummis (R-WY) introduced and lent their support to new bipartisan legislation that would tighten the rules for the entry of millions of imported packages coming into the country. These arrive duty-free through the so-called “de minimis loophole” which allows for exemptions for items costing under $800.
National Council of Textile Organizations (NCTO) president and CEO Kim Glas, in supporting the legislation, said “This bill eliminates de minimis for the most import-sensitive products and goods subject to trade remedies, including the vast majority of textile and apparel imports from China and the rest of the world. It is a major step in the right direction toward closing the loophole.
“De minimis shipments have grown exponentially due to the explosion of e-commerce and the growth of companies like Shein and Temu that have built their business models around this duty-free loophole. As a result, the U.S. market has been inundated with a flood of low value, subsidized and often illegal and tainted imports that are endangering U.S. consumers and undermining the U.S. textile and apparel production chain.”
Writing in The Robin Report online newsletter, journalist Ross O’Brien said that while enacting legislation that could cause prices to increase is a tricky matter in a U.S. election year, “Passing such legislation could effectively double the price of a Shein T-shirt by forcing the fast fashion giant to absorb punitive duties (and build an onshore fulfillment infrastructure from scratch when air freight becomes unfeasible).”
But we may already be seeing some of the first real signs of government pushback against these low-cost imports. In June U.S. Customs and Border Protection officials suspended what is reported to be “multiple” custom brokers who had been involved in these import programs that Shein and Temu use. One such broker, Seko Logistics, confirmed to Supplychaindive.com that it had been suspended and that it had previously moved more than 14 million parcels a month, including for brands like Shein.
Whatever eventually happens, low-cost sellers will always be around and history has shown that new processes will come along to service that segment of the marketplace. But at least for now, it appears that companies like Shein and Temu may have reached their maximum marketplace penetration.