Shein and Temu Face Massive Roadblock With New Package Duties

New tariffs on low-value packages from China could hinder the plans of Shein and Temu.

As the Financial Times (FT) reported Wednesday (April 9), the White House has upped duties on those packages to 90% of their value, or a flat fee of $75 that would increase to $150. The duty goes into effect May 2, with the flat-fee hike happening after June 1.

The shift follows President Donald Trump’s closing of a loophole that allowed Chinese imports under the “de minimis” threshold of $800 to arrive duty-free.

As the FT notes, this increase is a major blow to eCommerce fast fashion retailers Shein and Temu in the U.S., considered to be their largest market. The two companies have been able to compete by offering what the report characterizes as “eye-wateringly cheap” products, in part by avoiding import duties.

Analysts warn that closing the de minimis loophole will both upend the business models of these cheap retail platforms and other Chinese eCommerce firms while also slowing deliveries, the report added.

Brittain Ladd, a U.S. supply chain consultant who has worked for Amazon and Dell, told the FT that ports would be flooded with packages.

Ladd added that the commerce department had introduced a new software system to manage the duty payments, but there would still be delays as “the volume of packages that have to be processed is massive.”

Meanwhile, PYMNTS on Wednesday examined the way artificial intelligence (AI) can help businesses mitigate some of the impacts of the tariffs.

“Tariffs, like any crisis, are extremely dynamic — and the latest round that imposed tariffs on all U.S. importers is a perfect example,” Leagh Turner, CEO of Coupa Software, told PYMNTS.

“They impact businesses in different ways depending on their country, product type and trade relationships. That makes it difficult for leaders to predict the full impact to their business.”

But with AI, that report added, companies can monitor and understand shifting tariff policies in real time, allowing them to pivot more quickly.

“AI-powered trade policy monitoring scans government announcements and regulatory updates to forecast potential tariff shifts,” Tarun Chandrasekhar, president and CPO at Syndigo, said in an interview with PYMNTS.

He added that historical analysis of earlier trade policies and macroeconomic trends can find patterns that can provide brands with insight into how possible future tariff increases or decreases could affect them, such as how tariffs on specific materials impacted sales of certain clothing items.