Due to new trade policies, Temu and Shein are set to alter their business strategies starting in April 2025. The Trump administration has recently supported changes to the “de minimis” exemption, which will take effect on May 2.
In the past, the “de minimis” rule provided allowance for the entry of inexpensive Chinese goods into the US without tariffs. With this regulation removed, however, these goods will now have to incur significantly higher tariffs. As a result, Temu and Shein will be compelled to adjust their prices and alter their business strategies temporarily.
De Minimis Exemption Ending
Previously, the U.S. government allowed purchases under the value of $800 to be imported into the country without taxation following the “de minimis” rule. This enabled Shein and Temu to offer better deals as their products were readily available to American shoppers.
Though with the recent addition of a new decree, there is now a cap on these shipments. The cap is set at 145%, which will greatly increase the cost for affected retailers. It comes with significant added taxes, which will greatly limit these low shipment costs.
Price Increases and Operational Adjustments
Temu and Shein will raise their prices starting April 25 due to a new policy change. Temu has already removed some items from its website and is urging customers to shop before the new tariffs take effect. Shein has notified its users about the price increase and explained that the new tariffs are driving the change.
Strategic Shifts to Mitigate Impact
To deal with the new tariffs, Temu and Shein are trying different strategies to keep their operations smooth. Temu places more items into its U.S.-based warehouses to reduce shipping times and cut extra costs associated with import taxes.
Shein imports goods from places such as Brazil and Turkey and constructs U.S. distribution centers. These strategies enable both firms to offer competitively priced products and quickly fulfill delivery expectations for American buyers.
The Effects on E-Commerce
The changes made by defaulting a minimum tariff and removing the de minimis exception will have profound effects on e-commerce. Temu and Shein have already begun making shifts, with other online retailers who rely heavily on Chinese imports facing greater challenges.
Moderated pricing could, however, force corporations to shift their pricing strategies to the consumers and possibly reduce the range of products offered in the United States.
The After Effects
These actions were taken by Chinese e-commerce merchants Shein and Temu in response to newly imposed trade regulations. Shift in operational strategies speaks volumes of how challenging it is for international retailers to sustain these changes without background analysis.
In the months to come, these adjustments and their outcomes will be monitored to assess the impact of these amendments on consumer interactions and evaluate the state and direction of global e-commerce.