U.S. temporarily softens tariffs on Shein and Temu goods
Trump's tariff pause creates a golden opportunity for Temu and Shein to reevaluate and amplify their US operations, specialists claim.
This Monday, the US and China announced a truce, lowering tariffs on most Chinese imports to 30% for a 90-day period. The agreement also loosened the so-called "de minimis" rule, effective Wednesday, slashing the tariff rate on low-value packages shipped to the US from China to a staggering 54% from its previous 120%.
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Initially, these tariff hikes had inflated US consumers' expenses on platforms like Shein and disrupted the flow of Temu's US orders. However, the latest tariff cut allows these platforms to replenish their US warehouses and fulfill existing orders, experts say.
According to Anand Kumar, associate director of research at Coresight Research, Temu and Shein are bound to intensify their shipment volume to the US, giving them the chance to reassess their long-term strategy.
Jason Wong, associated with Temu's product logistics in Hong Kong, opines that the company has stopped shipping from China following the end of the "de minimis" exemption and has relied on US stockpiles to fulfill orders. Wong anticipates a resurgence of bulk shipments subject to the 30% tariff rate to the US, replenishing these stockpiles.
The Plight of Small-Value Packages
The tariffs situation remains dicey for small-value packages under "de minimis" as the latest policy update retains a $100 flat fee per postal item, whereas a planned increase to $200 was initially scheduled for June, as per the White House's executive order on Monday.
Wong prophesies that this tariff rate needs to be relaxed further for Temu to resume its small-value shipments from China to the US. Shein has yet to publicly announce an end to direct shipments from China; however, it reminds customers that "tariffs are included in the price you pay."
The reduced tariffs on low-value packages shipped from China to the US could lead to reduced prices, said Coresight's Kumar. In response to looming changes to the "de minimis" exemption, Shein has expanded its supply chains, setting up manufacturing operations in countries like Turkey, Mexico, and Brazil. Additionally, there are reports suggesting a shift of production to Vietnam.
Neither Temu nor Shein responded to CNBC's requests for comment.
The tariff cut follows Trump's termination of the "de minimis" exemption policy, which critics accused of hurting local businesses and aiding illicit fentanyl trade. This exemption helped Temu and Shein maintain budget prices on the merchandise they were shipping directly from China.
With the US government suspending the exemption briefly in February and then reinstating the provision days later, as customs officials grappled with processing and collecting tariffs on a cluster of low-value packages, US competitors like Amazon are also expected to scurry to import goods expeditiously during the 90-day window, as per trade experts.
"Everybody's in the same boat," says Cameron Johnson, senior partner at Shanghai-based consultancy firm Tidalwave Solutions. "Companies will frantically rush to get their inventory into the country as soon as possible."
- Amidst the tariff cut, sports enthusiasts may have an opportunity to purchase sports merchandise from platforms like Shein and Temu at potentially lower prices, given the reduced tariffs on low-value packages.
- With the possibility of increased shipment volume from platforms like Temu and Shein to the US, it might be an opportune moment for sports leagues or teams to negotiate sponsorship deals or exclusivity rights for their official merchandise.
