The Biden administration has proposed new regulations aimed at imposing taxes on low-value shipments from China, particularly those from popular e-commerce platforms Shein and Temu. These rules would eliminate an existing exemption that allows packages worth less than $800 to enter the US without tariffs, a policy that has been criticized for giving these companies a competitive edge over domestic retailers.

The “de minimis” rule, established in 2016, was initially raised from $200 to $800 to simplify trade and help US customs officials focus on higher-priority imports. However, lawmakers have voiced concerns about its misuse by companies like Shein and Temu, which ship directly from manufacturers in China to US customers, often undercutting competitors with lower prices. The new rules would primarily target Chinese goods already facing US tariffs, such as textiles, apparel, shoes, and machinery.

Both Shein and Temu have defended their business models. Temu credited its growth to an “efficient business model” that eliminates middlemen, allowing it to pass savings to consumers. The company stated it was reviewing the proposed rules but remained committed to delivering value to its customers. Shein also emphasized its “on-demand” model, supporting reforms to apply the rules fairly across the board. The company added that it was already working closely with US Customs and Border Protection (CBP) to improve compliance.

The rise of Shein and Temu, driven by aggressive marketing and ultra-low prices, has brought them under scrutiny from US lawmakers and regulators. Concerns have been raised about the safety of products sold on their platforms and allegations that some items may be made using forced labor. Additionally, the surge in low-value shipments has overwhelmed US customs, with de minimis packages rising from 140 million in 2013 to over 1 billion in 2023.

Commerce Secretary Gina Raimondo said the proposed changes aim to level the playing field for American workers and businesses, accusing Chinese e-commerce platforms of exploiting the exemption to avoid tariffs and consumer protection laws. The new rules will undergo a public comment period before being finalized. If implemented, they could significantly impact the business models of Shein and Temu, while also increasing costs for consumers. 

Shares in PDD Holdings, which owns Temu, fell by more than 2% following the announcement. Similar measures are being considered in the European Union.