Proposed US tax changes will not hurt competitive edge, Shein says

Government plans to close a loophole in the US that allows low-value shipments to enter the country duty free will not damage business for Shein, its executive chairman Donald Tang has said. 

According to The Business of Fashion, Tang said it would not affect the company’s market position, after White House officials announced plans to crack down on a trade exemption for packages that fall under the $800 (£606m) threshold. 

The exemption was originally meant to make it easier for Americans to receive small parcels from abroad or bring home souvenirs.

However, it has led to a rise in trade from e-commerce companies including Shein and Temu, which ship directly to US consumers from China. 

According to Tang, changes to the tax rules will not impact Shein’s market position. 

He said: “Shein has a competitive advantage because of its on-demand model and not the de minimis rules. The efficiency and the wide choice we provide gives the company not just a few points’ advantage, but a significant advantage.”

The Biden administration recently proposed the new rules that would exclude a wide array of goods from being able to claim the tax exemptions. The proposed regulations will also make claiming duty free status more complex.

The US said the number of shipments entering the country through the ‘de minimis’ rule had jumped from about 140 million a year a decade ago to more than one billion a year today. 

Officials said the volume of parcels made it harder to block shipments of faulty products and illegal drugs, such as fentanyl. 

The proposed rules aim to ensure products that ship direct-to-consumer cannot avoid the higher duties, which the White House said covered 40% of imports from China, including 70% of textiles.