For years, we’ve gotten used to making massive purchases of clothes and household items because they were cheap. They come in a giant bag, almost like Santa’s sack, and inside, there’s everything. You can buy outfits for events, swimwear, homeware, all at completely absurd prices. Who wouldn’t buy Stitch sheets for $10? Or a blazer for $60?
Shein and Temu have been “the GOAT” of this market, and consumers quickly elevated them to that status precisely for that reason, their low prices, the ability to add coupons, and the amazing discounts they offer on their platforms. But maybe, those carts full of clothes, waiting for the courier with that big white package, and making endless hauls for your friends on TikTok, is about to change. The government wants to take a new political step that might hurt these fast fashion platforms a bit.
Do these platforms pay taxes?
Here’s the key to this information. For years, Chinese companies (and Amazon, since it also operates on the Asian continent) took advantage of what’s called the de minimis exemption, a tax break that allowed any order under $800 to enter the country without paying taxes.
Of course, that’s what allowed these types of companies to skyrocket and quickly become the favourite stores for many consumers.
And what’s changing now?
The government has decided to eliminate this policy. So, clearly, if consumers or the platform have to pay those taxes or duties, the clothes won’t be so cheap anymore because someone will have to cover that extra cost.
Also, even though currently these orders are shipped quickly and arrive in under 10 days, that might change too, since they’ll now have to go through customs and declare their value, which could slow down deliveries.
Why the change?
Congress and many local businesses had been calling for an end to this exemption for some time, arguing it created unfair competition. In 2023, it was revealed that 30% of the packages entering the U.S. came from China without paying taxes. Additionally, Trump has tightened trade policy further by imposing new tariffs, 10% on China and 25% on Mexico and Canada.
Does this affect big companies?
Shein and AliExpress (from Alibaba Group), Temu, and Amazon are the main companies likely to be hit hardest by this.
According to Juozas Kaziukenas, CEO of Marketplace Pulse, this exemption was key to keeping prices low and shipping fast. Without it, their profit margins, which were already just 10-15%, could drop by five percentage points, a huge blow considering how tight those margins already were. Most likely, consumers will also notice price increases immediately.
And what about Amazon?
While Amazon also sells low-cost products through its lesser-known Amazon Haul platform, it may not be as affected by these changes because its more diversified structure gives it better protection. Gil Luria, an analyst at DA Davidson, even believes the company could benefit if Shein and Temu lose competitiveness: “Amazon could absorb customers looking for low prices with more reliable delivery.”
Alternatives for consumers
Shopping on these platforms is almost a hobby for many, it’s a “I’ll just browse for a bit” that ends with a cart full of 12 items. Why do we do this? Maybe because we’re obsessed with fast fashion, with always having something new to wear or use, with looking trendy. Plus, low prices helped: a $60 cart could easily include 12 brand-new items for you. We can debate the quality another day, but for less fortunate budgets, Shein has been an oasis in the middle of a desert.
But clearly, everything comes to an end. And if this tax reform plan finally goes into effect, many people will have to reflect on their shopping habits and consider buying from local stores as well. Because, let’s be honest, maybe we didn’t really need that $3 t-shirt or that avocado-shaped pencil case. Are we obsessed with online shopping?