The White House has closed a loophole that allowed the retailers to escape import duties
of ConsumerAffairsApril 18, 2025
Key takeaways
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Price Hikes Due to Policy Changes: Temu and Shein plan to raise prices for U.S. consumers starting April 25, 2025, in response to the end of the “de minimis” tariff exemption, which previously allowed duty-free imports under $800.
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Business Model Under Pressure: The policy change, prompted by a Trump-era executive order, challenges their low-price model. While U.S. officials hope it will push these companies to alter their approach, Shein has stated it will raise prices rather than change its operations.
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Low-Cost Strategy and Marketing: Temu and Shein have kept prices low by sourcing directly from Chinese manufacturers and avoiding middlemen. Their growth in the U.S. has also been fueled by aggressive social media marketing, especially on TikTok and Instagram.
Cheap goods from Chinese online retailers Temu and Shein wont be as cheap starting next week. The companies say they pkan to raise prices for U.S, customers because of the Trump administrations move to end a tariff loophole on low cost imports.
The loophole is know as the “de minimus” exemption. Until Trumps executive order, it allowed merchandise priced below $800 to be imported to the U.S. duty-free. Trump issued the order, saying he wants this group of retailers to change their business model. Instead, Shein said it will simply raise prices.
“Due to recent changes in global trade rules and tariffs, our operating expenses have gone up,” Shein said in a statement. “To keep offering the products you love without compromising on quality, we will be making price adjustments starting April 25, 2025.”
While prices are expected to go up, its not clear by how much. Shein, a fashion retailer, normally sells dresses for as little as $6 and as much as $90. Temu reportedly has a much wider price range.
How Temu and Shein have kept prices low
Both Temu and Shein offer products at prices that are significantly lower than traditional U.S. retailers. They are able to do it because of their direct-from-manufacturer model. They source goods directly from Chinese factories, cutting out middlemen.
They also enjou low-cost production. Manufacturing in China enables cheaper labor and materials. They also have minimal overhead. Unlike brick-and-mortar retailers, both operate predominantly online.
The two companies have also built their U.S. business by being heavily dependent on social media, in particular, TikTok. They also make heavy use of Facebook, Instagram, and Google ads to target user preferences.
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