Chinese companies selling their wares or providing logistical backing to “fast fashion” e-commerce giants Shein and Temu are “contending with the chaos” after President Donald Trump ordered an end to a shipping loophole that allowed them to avoid tariffs and human rights scrutiny, the South China Morning Post reported on Sunday.
The Hong Kong newspaper spoke to suppliers for the e-commerce sites who complained that Temu and Shein had not yet reached out to its suppliers to explain any new processes necessary to contend with Trump’s move. The shippers expressed concern that the companies may soon be forced to stop accepting their goods to sell on their platforms.
“China’s cross-border merchants and logistics service providers are contending with the chaos caused by US President Donald Trump’s back-and-forth tariff policies,” the Morning Post explained, “as businesses brace for more shocks in an already challenging retail market.”
One supplier told the newspaper he has continued to deliver his products to the companies but indicated he did not know how long his business would continue.
Shein and Temu are both Chinese companies that sell directly to American consumers online, most commonly through mobile phone applications. They offer low-quality products at highly discounted prices; Shein specializes in clothing targeting young women, while Temu sells clothing as well as household goods, art supplies, and other products.
At the heart of the companies’ successes are their extremely low prices, which have made it nearly impossible for American rivals to compete. Both Shein and Temu benefit from a trade loophole known as de minimis, which waives tariffs and duties on packages entering the United States worth less than $800.
The de minimis loophole also exempts these packages from scrutiny to ensure that their manufacture complies with America’s anti-slavery laws – including, pivotally, the 2022 Uyghur Forced Labor Prevention Act (UFLPA), which creates a rebuttable legal presumption that an item containing cotton coming from occupied East Turkistan has been tainted by slavery. China has occupied East Turkistan, which it refers to as the “Xinjiang Uyghur Autonomous Province” (XUAR), for decades and has built a massive slavery infrastructure there as part of a larger genocidal effort against its indigenous populations.
A report by the House Select Committee on the Chinese Communist Party published in 2023 found that 30 percent of packages benefitting from de minimis upon entry to the United States at that time were shipped by Shein or Temu. The report concluded that an “extremely high risk” existed of products sold on those site having slavery present in their supply chains.
“Temu is doing next to nothing to keep its supply chains free from slave labor,” House Select Committee on the Chinese Communist Party chair Rep. Mike Gallagher (R-WI) said at the time. “At the same time, Temu and Shein are building empires around the de minimis loophole in our import rules – dodging import taxes and evading scrutiny on the millions of goods they sell to Americans.”
President Trump signed an executive order in early February imposing a ten-percent tariff on Chinese goods that included a provision closing the de minimis loophole. The president paused the implementation of that policy on February 7, but only to give the federal government time to build a process for properly collecting duties and tariffs on the affected packages and ensuring that they comply with anti-slavery provisions.
The Morning Post report followed indications that the companies are preparing to be forced to significantly limit the volume and variety of their shipments to America. Shortly after the news that Trump had temporarily suspended the initial executive order closing the de minimis loophole, the tech magazine Wired reported that consumers were reporting a dramatic reduction in the number of products available on Shein and Temu’s storefronts. One supplier told Wired that Temu raised the prices of his goods as much as 50 percent following the executive order. Shein and Temu, not the suppliers of their products, set the prices for what they sell.
Shein, meanwhile, reportedly began preparing for a massive $50 billion drop in its valuation for a prospective initial public offering (IPO) on the London stock market. Shein has reportedly been in preparations to trade in London for months but has yet to successfully complete the administrative work necessary for its IPO.
Some Chinese suppliers, Wired noted, began complaining about price increases and uncertainty on the Chinese social media site Xiaohongshu, or “Little Red Book,” which enjoyed a brief moment of popularity in the United States in January amid concerns that the similar online application Tiktok would be banned in America.
Shein and Temu have successfully carved out a massive share of the American consumer market. In 2023, Shein documented $2 billion in profits, its best year ever. Shein’s profits appeared to be seriously challenged only by Temu. After spending millions on advertisements during the 2024 Super Bowl, Temu skyrocketed in U.S. sales that year, sending Shein profits down as much as 70 percent.
A report published last week by the U.N.’s International Labor Organization (ILO) denounced extensive evidence of China subsidizing “widespread and state-sponsored forced labour practices in both the Xinjiang Uyghur Autonomous Region (Xinjiang) and the Tibet Autonomous Region (Tibet).” The Chinese government, the report detailed, was enslaving people both through its known concentration camp internment and a more recent phenomenon in which it forces traditional farmers off of their land and into factories, allegedly as they are “surplus” workers and need to be shepherded into modern industrial life.
