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U.S.-China trade reprieve buys Shein, Temu time to restock inventory

Published: 13 May. 2025, 21:14

Shein and Temu logos are seen in this illustration taken Aug. 22, 2024. [REUTERS/YONHAP]

An agreement between the United States and China to temporarily slash tariffs stopped short of reinstating the U.S. "de minimis" duty exemption for e-commerce packages from China, but still gives online retailers like Shein and Temu a window to adapt their businesses.

The Chinese firms, which have taken market share from dollar stores and mall rivals to surge to the top 10 most downloaded apps in the United States, will likely use the 90-day reprieve to bring in bulk shipments and restock their U.S. warehouses, trade experts said.

U.S. President Donald Trump's administration on May 2 ended the de minimis policy allowing packages worth less than $800 ordered online from China and Hong Kong to enter duty-free.

Shipping products duty-free from Chinese factories to U.S. consumers helped Temu and Shein surge in popularity, selling ultracheap gadgets, clothes, and accessories. Their success drove Amazon.com to set up a copycat service, Amazon Haul, which also benefited from the de minimis policy.

The removal of de minimis exposed those packages to steep tariffs of up to 145 percent on most Chinese goods, threatening business models centered around rock-bottom prices and leading Shein and Temu to cut advertising spending in the United States and turn to Europe instead. Amazon Haul, meanwhile, launched last week in Britain and Saudi Arabia.

Chinese President Xi Jinping attends the opening ceremony of the fourth ministerial meeting of the China-CELAC (the Community of Latin American and Caribbean States) Forum and delivers a keynote speech at the China National Convention Center in Beijing, capital of China, May 13, 2025. [XINHUA/YONHAP]

With the de minimis issue absent from Monday's announcement, trade experts said the exemption did not seem to be coming back. Even so, the 90-day cut in tariffs to 30 percent from 145 percent would help Shein and Temu restock their U.S. warehouses at lower costs.

"This is great for Shein and Temu, if nothing else, to replenish their U.S. inventory," said Yao Jin, an associate professor of supply chain management at Miami University of Ohio.

Instead of making individual shipments by plane, Shein and Temu are likely to ship products in bulk via container ship to the United States over the next 90 days to stock up ahead of the next possible tariff increase, said Jin.

Temu owner PDD Holdings, Shein and Amazon did not immediately reply to requests for comment.

On its U.S. website, Temu has been featuring products already in U.S. warehouses as it shifts its business model away from direct factory-to-consumer shipments. On May 2, the platform said all sales in the United States were now handled by locally based sellers.

Shein and Temu app icons are seen in this illustration taken Aug. 22, 2024. [REUTERS/YONHAP]

About 50 percent of air cargo shipments on the China-to-U.S. route were low-value e-commerce prior to the de minimis exemption removal, said Niall van de Wouw, chief air freight officer at pricing platform Xeneta.

Since May 2, overall daily average freighter capacity on that air freight corridor has dropped 39 percent, he added, citing data from consultancy Rotate.

Hugo Pakula, customs expert and CEO of trade automation platform Tru Identity, said Shein and Temu could send some products directly to consumers from China and others via bulk shipments, depending on price.

"There are some commodities that are low enough value that you can add 30 percent to the retail price and it still makes sense, as that would still be cheaper than Amazon or anywhere else," he said. "For a really, really cheap product, it's very possible they continue direct from China."

For Amazon, the latest trade update may give some third-party sellers time to plan and expedite orders from China for the holiday shopping season, although it remained unclear how many merchants would bite at the opportunity.

Reuters