As the U.S. ends its key tax exemption on Chinese imports, Shein and Temu face price hikes, supply hurdles, and shifting strategies.
For years, fast fashion giants Shein and Temu have relied on the U.S. de minimis rule — a tax exemption for imports under $800 — to flood the American market with ultra-low-cost goods. That rule is now history.
Starting this week, U.S. President Donald Trump’s executive order officially ends the exemption for packages from China and Hong Kong, marking a seismic shift in global e-commerce. The move, aimed at curbing illicit imports, is set to disrupt the business model that made these platforms wildly popular — and profitable.
Price Surges Hit American Shoppers First
With the exemption revoked, small packages from China are now subject to 120% duties or a flat $100 fee — doubling to $200 by June 1. For Shein and Temu, this means higher operational costs that are already trickling down to consumers.
Bloomberg’s analysis found some Shein products surging by 377%, while Temu is increasing U.S. prices too. However, in a surprising pivot, Temu announced a transition to a “local fulfillment model” to buffer against rising costs, onboarding U.S.-based sellers to mitigate the blow.
Canada Stays Untouched — For Now
While American customers brace for sticker shock, Canadian buyers are shielded — at least temporarily. Canada’s de minimis threshold remains unchanged, and no new tariffs are in play. Prices on Shein and Temu’s Canadian platforms remain stable, prompting speculation that both brands will double down on Canadian expansion.
“We’re probably going to see a lot of targeted advertising to Canadians,” says supply chain expert Samuel Roscoe.
Why Temu and Shein Still Have a Fighting Chance
Despite higher costs, analysts believe the companies won’t disappear. A $10 bikini may now cost $22 post-tariffs — but it’s still cheaper than alternatives from H&M or Zara. Their value proposition remains compelling, especially for low-income consumers.
“They’re still competitive,” says Roscoe. “Even at one-and-a-half times the price.”
Supply Chain Disruptions Loom Large
Temu and Shein’s ability to rapidly produce and ship small batches from flexible Chinese factories has been a cornerstone of their success. Recreating that elsewhere isn’t easy.
Moving production to lower-tariff countries like Vietnam sounds attractive, but experts caution it’s unlikely. Chinese factories’ ability to handle small runs with quick turnarounds — sometimes in just 25 days — is hard to replicate.
The new rule also slows border processing. Without de minimis, every package faces inspection, delaying deliveries and raising operational friction.
Fast Fashion May Survive — But Will It Slow Down?
Some hoped the tariffs might curb fast fashion’s environmental toll, steering shoppers toward thrift or buying less. But experts aren’t so sure.
“Sustainability won’t win by default,” warns Anika Kozlowski, a sustainable fashion researcher. She argues brands might cut corners further, turning to even cheaper — and often more polluting — materials to keep prices attractive.
And while resale may see a temporary uptick, rising costs for imported repair items like zippers or buttons could inflate the price of second-hand goods too.
Will the U.S. Market Stay Essential? Yes.
Despite global ambitions, neither Shein nor Temu can afford to lose the American market.
“We simply do not have another market that can match it,” says Sheng Lu, a professor of apparel studies.
Ultimately, experts agree: tariffs alone won’t break the fast fashion model. Consumer demand for cheap, trendy clothes is the real engine. As long as that appetite exists, the race will continue — even if the rules change.
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