The Trump administration’s move to cancel the de minimis rule, which allowed low-cost imports worth less than $800 to enter the U.S. tariff-free, could hit fast fashion retailer Shein harder than online dollar-store Temu. While both companies have relied heavily on this rule in recent years, Temu has adapted faster to mitigate the impact.
The de minimis rule enabled Chinese retailers like Temu and Shein to ship millions of packages to the U.S. without import duties. However, the Biden administration’s scrutiny of the rule prompted both companies to prepare for its eventual cancellation. Analysts and sellers noted that Temu, owned by PDD Holdings, quickly adjusted its model by expanding its semi-managed approach. This model, similar to Amazon’s, involves bulk shipments to overseas warehouses instead of direct shipments to consumers.
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By the end of 2024, about 20% of Temu’s U.S. sales were shipped from local U.S. warehouses, and by the end of the year, half of its U.S. sales were shipped through warehouses. Temu has also increased its use of ocean freight for larger, more valuable goods, such as furniture, reducing its reliance on de minimis shipments.
In contrast, Shein, known for its ultra-fast fashion, still relies heavily on air freight for rapid delivery, despite opening supply chain hubs in several U.S. states. Shein’s model focuses on speed and trend reactivity, making it less flexible than Temu when it comes to adapting to changes in shipping regulations.
Following Trump’s executive order, the U.S. Postal Service reversed a decision to stop accepting parcels from China and Hong Kong, adding to the confusion in the express shipping industry. Analysts predict that the volume of de minimis shipments to the U.S. could drop by 60%, raising prices for American consumers shopping from Shein, Temu, and Amazon Haul.
Despite these challenges, tech analyst Rui Ma believes that China’s e-commerce operators, including Shein and Temu, will quickly adapt, thanks to their competitive supply chains. While the short-term impact may be significant, Ma does not anticipate catastrophic consequences, as China’s e-commerce sector is highly agile and capable of finding solutions.
