President Trump, as promised, set off a tariff war over the weekend, triggering an immediate response from some of America’s closest allies. Under the new tariff policy imposing what are effectively new taxes on imported goods from Canada, Mexico, and China, it is expected that Americans will pay more for everyday goods like maple syrup and PC hardware.
The tariff policy has received bipartisan backlash, with the likes of Rand Paul and Mitch McConnell coming out against the impositions. They have already been temporarily paused on Mexico while the two countries work out a deal. One positive, perhaps, is that Temu and SHEIN will have a harder time supplying teenagers with disposable garbage from China, some of which is believed to be manufactured by forced labor.
Trump’s executive order announced over the weekend imposes tariffs of 25% on goods shipped from Canada and Mexico, plus a 10% tariff on China, under the guise of various arguments, including that the countries have not spent enough on national security. It also specifically ends the “de minimis” exemption that allows packages shipped into the U.S. that are worth less than $800 to avoid tariffs. That exemption allowed discount Chinese retailers like Temu and SHEIN to ship directly to customers in the U.S. without paying many fees.
Another point of contention over the years has been in the way the United States Postal Service has charged Chinese customers lower fees to deliver to the U.S. compared to what they charge domestic customers. Bizarrely, it is often cheaper to ship a package to the U.S. from China than it is to ship a package from one state to another.
Both of these factors enabled Temu and SHEIN to compete against Amazon and explode in popularity by quickly identifying popular trends in America, rapidly spinning up the production of cheap knockoffs that they would heavily market through social media. These companies are essentially H&M or Forever 21 of yesteryear but on AI-powered steroids. According to eMarketer, Temu alone will sell $30 billion worth of products in the U.S. in 2025.
TikTok and Amazon both have recently spun up competing budget stores in response to the rise of budget Chinese e-commerce. Walmart, which allows third-party merchants to sell on its website, has seen an influx of cheap products meant to mimic the likes of the Hermès Birkin at much lower prices. Regardless of the store, we’re still mostly talking about products that come from China.
Amazon could be negatively impacted by the new tariffs as well, since much of the product on its website is shipped to American warehouses from China, but at least it will be on more level playing field with Temu and SHEIN.
Many of these products sold by Temu and SHEIN are, of course, cheap and disposable. The $3 earrings and $5 dresses found on SHEIN are often made out of cheap materials and are good for a few uses before they go in the trash. Sometimes they are even dangerous, as outlets have reported products from the sites including dangerous levels of lead. But these services enable teenagers to access the fashionable looks of their favorite influencers on a budget. Whatever people say about their concerns regarding the environment, ultimately consumers care about value over all else. Anyone old enough to remember Forever 21 will understand that we seem destined to go through this cycle with every new generation. Once people start to earn money, they realize a couple of quality pairs of clothing are better than twenty pairs of junk.
Reuters reported last week that the European Union is planning to enact a new policy that would make Temu, SHEIN, and Amazon liable for dangerous or illegal products sold on their platforms.
It is worth noting that even though these Chinese companies may be bad and worthy of scrutiny, President Trump’s action to implement blanket tariffs risks being regressive, harming lower income Americans disproportionately by making everyday goods more expensive—because Americans will pay the tariffs, not the Chinese. Other, less harmful manufacturers will also be impacted, including clothing makers in America that import materials.
Unfortunately, President Trump’s closure of the de minimis loophole does not mean Temu and SHEIN are going anywhere. The two companies have been reducing their reliance on the shipping loophole over the years, in part because they understood that operating through sneaky tricks is not sustainable, and also because under their current model of direct shipping, customers often have to wait up to 10 days to receive their orders—something the two companies wanted to fix. The companies now ship a lot of products in bulk to warehouses in the United States rather than sending them directly to customers. That means Temu and SHEIN will have to pay the 10% tariffs, which will almost certainly be passed on to customers.
Skeptics also say that Customs and Border Protection does not have the resources to inspect every package coming into the country, especially the often very small ones from the likes of Temu and Shein. Which is all to say, they might be hampered somewhat by the new policy, but the flow of garbage is likely to continue.