Ultra-cheap clothing from China could get more expensive under President Trump’s new tariffs, and help Amazon edge out competition from overseas.
An additional 10% tariff on all Chinese goods went into effect on Tuesday, the same day President Donald Trump agreed to pause tariffs against Mexico and Canada for 30 days.
In addition to imposing a 10% levy on Chinese imports, Mr. Trump’s executive order also suspended a little-known customs exemption that allowed goods of de minimis value — items worth less than $800 — to come into the U.S. duty-free. The order throws a wrench in the business models of China-based retailers like Shein and Temu, which were previously exempt from any tariffs and customs inspections thanks to the de minimis loophole.
The rule change is also likely to result in delivery delays since the packages now have to go through customs, Juozas Kaziukenas, founder of e-commerce intelligence firm Marketplace Pulse, told the Associated Press.
Neither Shein nor Temu responded to requests for comment on how the new rules would affect their businesses.
The de minimis exemption helped the Chinese e-commerce giants keep their costs low, and appeal to predominately young American consumers with contemporary styles at incredibly low prices. The companies ship directly to consumers, allowing them to compete with domestic players including Amazon, which launched its own answer to Temu and Shein last year, called Amazon Haul. Available strictly on the Amazon app, Amazon Haul features goods shipped from China that cost less than $10 and sells items that resemble those sold by Shein and Temu.
How much could prices rise?
Now that Shein and Temu are on the hook for existing duties they once bypassed, plus the new 10% tariff imposed by Mr. Trump, and potentially taxes collected by customs authorities, those added costs could be passed along to consumers.
While the price increases could be negligible, some shoppers may be turned off by shipping delays brought by forced customers inspections of the packages.
“If the tariffs stick, we could see higher prices on electronics, clothing and other things,” Ryan Young, senior economist for the Competitive Enterprise Institute, an advocacy group that argues for less regulation, told CBS MoneyWatch. “There will be frustrating delays, and this will put a damper on Temu, Shein and other low-cost vendors’ business models.”