The U.S. Postal Service has announced the suspension of all incoming packages from China and Hong Kong, effective immediately. This sweeping action likely stems from President Donald Trump’s recent implementation of 10% tariffs on all Chinese imports, which is aimed at curbing unfair trade practices and protecting U.S. businesses.
The USPS described the suspension as temporary, stating it will remain until “further notice.” While international letters and flats, which include larger envelopes and newsletters, will not be impacted, the suspension signals significant operational disruptions for popular e-commerce platforms like Shein and Temu, which rely heavily on low-cost shipments from China. These platforms utilized the “de minimis” exemption, which previously allowed goods valued under $800 to bypass customs duties, facilitating their business model.
Data from Customs and Border Protection (CBP) shows the staggering scale of these low-value shipments. During the last fiscal year, 1.36 billion “de minimis” transactions entered the U.S., almost ten times the amount just eight years prior. Alarmingly, the data revealed nearly half of these shipments originated from China, with Shein and Temu accounting for about 30% of these imports. The Biden administration's National Economic Advisor, Lael Brainard, emphasized the need to “not allow Chinese-founded e-commerce platforms to gain unfair trade advantages,” signaling the administration’s commitment to recalibrated trade relations.
The closure of the “de minimis” loophole was especially timely, as the legal framework around tariffs underwent revisions late last year amid increasing scrutiny of e-commerce practices. Such regulatory changes are echoed by the European Commission's recent move to hold online platforms accountable for selling unsafe or non-compliant products. Approximately 4.6 billion low-value items from China flooded the EU market last year; regulators have voiced concerns over both safety and environmental consequences associated with these imports.
China’s online marketplace Temu and fast-fashion giant Shein are central to this discussion as the EU’s crackdown begins to take shape with coordinated investigations under the Consumer Protection Cooperation Network. The scrutiny is heightened by suspicions surrounding safety compliance, compelling compliance with European consumer protection laws.
EU officials articulated the necessity of these regulations, stating, “We want to see a competitive e-commerce sector with safe products.” Vice President Henna Virkkunen remarked on the challenges posed by the flood of cheap imports, acknowledging the increased pressures on customs authorities.
Meanwhile, potential retaliatory measures loom from China, as the foreign ministry has announced plans to impose tariffs on U.S. products such as coal and liquefied natural gas, following the heightened tariffs on Chinese goods. Beijing condemned the U.S. administration's actions, asserting it as “a serious violation” of World Trade Organization regulations.
The thrust of regulatory scrutiny raises serious questions about the practices of Shein and Temu. A bipartisan investigation by the House Select Committee on China concluded Temu might be shipping goods produced with forced labor. Both companies have denied these accusations, stressing their commitments to ethical sourcing and compliance standards.
A Shein spokesperson stated, “We have made it our priority to implement best-in-class standards,” emphasizing their participation in the U.S. Customs and Border Protection Section 321 Data Pilot program, which is meant to improve compliance tracking alongside their supply chain integrity claims.
On the retail front, both Shein and Temu may face increased operational costs due to tariff changes, potentially passing these costs onto consumers. Historical data show consumers have previously benefitted from the low-cost model provided by these e-commerce giants, but these tariff changes signal likely price hikes on popular consumer goods.
Experts are watching closely as these regulatory changes play out. "It would be pretty bold to add the fast-fashion companies to the [forced labor] list," said Greta Peisch, former general counsel for the U.S. trade representative, indicating the high stakes involved for both platforms.
Shein has already expressed discontent with earlier regulatory actions concerning the “de minimis” provision and has called for sweeping reforms. Yet, with new scrutiny from both sides of the Atlantic, the future of these platforms hangs precariously, challenging their operational paradigms and forcing them to navigate ever-complex trade regulations.
Regulatory pressures from the U.S. and EU mark a steep hill for Shein and Temu, and as the investigations and new tariffs develop, the impacts on their business models will be increasingly difficult to navigate. The shifts could have lasting consequences, not only for these companies but also for the broader e-commerce ecosystem.