Struggles Continue: Steep Tariffs Persist for Budget-Friendly Retailers Temu and Shein in U.S.
Stricter U.S. customs regulations pose challenges for online retailers Temu and Shein.
Even with a slight dip in China-US trade strife, terms set to disadvantage budget-friendly online retailers such as Temu and Shein persist. Once freed from tariffs on shipments below the $800 mark, these retailers now face a 120% tariff - with a minimum charge of $100 per order, effective since May. Despite the recent reduction to 54%, the minimal fee continues to stand, raising to $200 on June 1, according to a presidential declaration.
US consumers, accustomed to economical goods from retailers like Temu and Shein, will likely find the revised regulation pricier. The online retailers may find it more cost-effective to stock goods in US warehouses and sell directly, as the standard tariff on Chinese imports has dropped by 30% under an agreement with Beijing.
Criticisms of the duty-free "De-Minimis" rule, long aired by US retailers, portray it as an unjust advantage for Chinese counterparts. President Trump supports this move, attributing it to curbing the entry of dangerous substances like Fentanyl. Consequently, Chinese online retailers have begun to hike prices in the US, owing to the removal of this exemption.
Source: ntv.de, jog/dpa
- China
- USA
- Donald Trump
- Trade Disputes
- Tariffs
Details for the Uninformed:The tariff levied on low-cost Chinese imports, primarily aimed at retailers like Temu and Shein, equates to either a 54% tariff for low-value shipments or a set charge of $100 per order. In comparison, previously these items were exempt from tariffs if their value lay below $800.
This shift brings about several challenges for the retailers:
- Burdened Costs: Implementing the new tariffs on previously tariff-exempt low-value goods drastically increases operational expenditures for these retailers, potentially translating into higher retail prices for consumers, thereby affecting demand and profitability.
- Business Model Modification: With business models heavily dependent on low-cost, tariff-free shipping, this new levy compromises the existing model, compelling these companies either to absorb the increased costs or transfer them to consumers.
- Market Expansion Obstacles: While seeking out alternate markets such as Canada, the vast and lucrative US market remains pivotal for these retailers. Foregoing this market could impair their strategic objectives.
- Enhanced Regulatory Oversight: The elimination of the De-Minimis exemption will result in heightened regulatory scrutiny and delayed customs processing, potentially impacting delivery times and customer satisfaction.
Given the persisting tariffs on budget-friendly retailers like Temu and Shein, community policies should consider addressing the financial impact on consumers. To maintain affordability, employment policies within these companies might need revisions to absorb the increased costs or adjust prices. Additionally, industry experts should investigate alternative financing options to keep up with the competitive landscape and maintain growth in the finance sector.
