New Take: Trump's Tariff Pause Gives Shein and Temu a Breather
U.S. eases tariffs momentarily for Shein and Temu brands
President Donald J. Trump's recent tariff pause opens an opportunity for retail giants like Shein and Temu to boost their U.S. stockpiles and reassess their supply chain management, experts suggest.
On Monday, the U.S. and China ** hammered out an agreement** to slash tariffs on most imported Chinese goods to 30% for a 90-day period. This move also saw the "de minimis" rule relax beginning Wednesday, lowering the tax on low-value packages coming from China to 54% — a decrease from the previous 120% [NPR].
All the Tea About Tariffs
The suddenly beneficial tariff rates had previously caused price hikes for U.S. consumers on Shein's platforms. Meanwhile, Temu had halted direct shipments from China, leading to some hiccups in fulfilling U.S. orders.
But this temporary respite offers them a chance to ramp up their shipments from China, restock their warehouses, and meet existing orders, experts note.
According to Anand Kumar, associate director of research at Coresight Research, the companies will undoubtedly augment their shipments to the U.S. during this period, which will aid them in reassessing their long-term strategies.
Meanwhile, Jason Wong, who has worked closely with Temu's product logistics in Hong Kong, states that the company has temporarily halted shipments from China post-"de minimis" exemption expiration and relied on domestic reserves to cater to orders.
Under the revised tariff policy, Wong envisions the resumption of bulk shipments subjected to the 30% tariff to the U.S., replenishing these stockpiles. "Despite 30% still being high, it's peanuts compared to 125%," he adds.
Small-Value, Big Impact
Things remain trickier, however, for low-value packages under "de minimis." The recent policy update maintains a $100 flat fee per postal item, canceling the proposed June increase to $200. Yet, experts like Wong expect further reductions for Temu to resume small-value shipments from China to the U.S. [CNBC].
Shein, though, hasn't stopped direct shipments from China, stating that tariffs are already incorporated into the prices displayed on their platform.
Going Global (In More Ways Than One)
In preparation for potential changes to the "de minimis" exemption, Shein has expanded its supply chains, establishing manufacturing operations in Turkey, Mexico, and Brazil. It is also alleged to be considering shifting production to Vietnam [Forbes].
The reduced tariffs on low-value packages shipped from China to the U.S. could lead to a relaxation of prices, according to Kumar.
Shein and Temu have yet to comment on CNBC's requests for comment.
A Few Changes Here and There
On May 2, Trump ended the "de minimis" exemption policy, initially criticized for hurting local businesses and facilitating illegal fentanyl trade. The small-package tariff exemption had helped Temu and Shein maintain economical prices on their Chinese imports.
The U.S. government had previously suspended the exemption in February before reinstating it a few days later, as customs officials grappled with processing and collecting tariffs on a surge of low-value packages [Business Insider].
U.S. competitors like Amazon are also expected to ramp up shipments during this 90-day window, as trade experts predict. "Everyone's in the same boat," sums up Cameron Johnson, Shanghai-based senior partner at Tidalwave Solutions [CNBC].
Shein and Temu might use this tariff pause to secure loans for investments in technology, resulting in more efficient supply chain management and faster order fulfillment.
The reduced tariffs on low-value packages shipping from China to the U.S. could lead to lower prices for Shein and Temu, allowing them to invest in technology for improving and scaling their operations.
