Biden Takes Action to Crack Down on Shein and Temu, Slows Shipments to US

The Biden administration has proposed rules that could make it more expensive for Chinese e-commerce platforms like Shein and Temu to ship goods to the U.S.

In his announcement to clamp down on “unsafe, fraudulently traded products,” President Joe Biden accused China-based e-commerce platforms selling cheap goods of abusing “de minimis exemptions” that allow shipments worth less than $800 to be exempt from duties.

Platforms that use the exemption can share less information about packages and avoid taxes. Biden warned that “over the past 10 years, the number of packages that come into the United States that are reported minimum exemption has increased significantly, from about 140 million per year to more than 1 billion per year.” And “the majority of shipments entering the United States that report minimum “The exceptions are for a few e-commerce platforms founded in China,” Biden said.

As a result, America has been flooded with “vast volumes of low-value products like textiles and apparel” that compete in a “tariff-free” market, Biden said. And that makes it “harder to track and block illegal or dangerous shipments” likely lost in the flood.

Biden says allowing this alleged abuse to continue wouldn’t just hurt American companies like H&M and Zara, which are increasingly struggling to compete with platforms like Shein and Temu. It would also reportedly make it harder to “enforce U.S. trade laws, health and safety requirements, intellectual property rights, consumer protections, and block illegal synthetic drugs like fentanyl and synthetic raw materials and machinery to make drugs from entering the country.”

Raising tariffs could make cheap goods shipped from China more expensive, potentially raising prices for consumers who have apparently flocked to Shein and Temu to satisfy their shopping needs as the pandemic has battered families’ wallets and the economy.

Biden specifically proposed excluding minimum an exemption for all shipments “containing products subject to tariffs imposed by Section 201 or 301 of the Trade Act of 1974 or Section 232 of the Trade Expansion Act of 1962.” This would include, Biden specified, “certain e-commerce platforms and other foreign sellers” who are currently “circumventing these tariffs by shipping goods from China to the United States” and “claiming a de minimis exemption.”

The new rules would also require e-commerce platforms to share more information about shipments, “including the 10-digit tariff classification number and the de minimis exemption claimant.” That would help eliminate illegal minimum supplies, Biden suggested.

Shein and Temu defend business models

Neither Shein nor Temu seem willing to let the proposed guidelines slow their rapid growth.

“Since launching Temu in September 2022, our mission has been to offer consumers a wider choice of high-quality products at affordable prices,” a Temu spokesperson told Ars. “We achieve this through an efficient business model that cuts out unnecessary middlemen, allowing us to pass on the savings directly to our customers.”

A Temu spokesperson told Ars that the company is currently analyzing the new regulatory proposals and remains “committed to delivering value to consumers.”

“Growth does not depend on minimum “politics,” a Temu spokesman said in an interview with Ars.

Shein similarly doesn’t seem fazed by the announcement. Starting this year, Shein began voluntarily sharing additional information about her low-value shipments to the U.S. under a U.S. Customs and Border Protection (CBP) pilot program. The move comes after CBP expanded the pilot last year as part of its mission to test ways to “identify and target high-risk shipments for inspection while expediting legitimate trade flows.”

A Shein spokesperson told Ars that “Shein treats import compliance as a top priority, including reporting requirements under U.S. law with respect to de minimis entries.”

Last year, Shein executive vice president Donald Tang proposed what he considered good de minimis reforms “to create a level, transparent playing field.” In a letter to the American Apparel and Footwear Association, a U.S. trade association representing more than 1,000 well-known brands, Tang called for the same rules to be applied equally, regardless of where a company is headquartered or ships from.

As Tang suggested, this would bolster consumer confidence while also creating “an environment that allows companies to compete on the quality and authenticity of their products, the caliber of their business models and the efficiency of their customer service, which has always been the heart of American entrepreneurship.”