Recent tariff orders have reversed the “de minimis” exemption, a long-standing shipping exemption that allowed for low prices and fast shipping. A change which, according to CNN, will likely raise costs for the two retailers’ U.S. consumers. In addition, the new administration is considering whether to add both low-priced Chinese companies to the Department of Homeland Security’s forced labor list reports Semafor.
New members on the forced labor list?
In 2021, as part of the Uyghur Forced Labor Prevention Act, the U.S. Congress established the forced labor list. The list singles out companies that use forced labor to mine, produce, or manufacture goods in China’s Uyghur region. Consequently, goods on this list are prohibited from importation into the United States.
Semafor reports Greta Peisch, a former general counsel for the U.S. trade representative under the Biden administration said:
“It would be a pretty bold move, to add the fast-fashion companies to the list. Alongside the ending of the shipping exemption, it would show the Trump administration is really targeting consumer goods.”
Correspondingly, a 2023 bipartisan investigation found that Temu was probably shipping goods made with forced labor into the U.S. on a “regular basis,”. Shein’s use of the “de minimis exception” was also criticized. Following, Congress said in the findings that it had “serious forced labor concerns” about both retailers. Sources for the article noted that no final decision on the matter has been made.
Removing the “de minimis” exemption
In addition to being considered for the forced labor list, a halt was put on on the “de minimis” exemption. This exemption allowed companies like Shein and Temu to ship packages valued under $800 into the U.S. without facing taxes or inspections. Getting rid of the policy that made goods so cheap and easy to access could dent that success.
Juozas Kaziukenas, CEO of e-commerce data firm Marketplace Pulse said:
“For companies like Temu and Shein this is obviously a very big deal because de minimis was one of the levers they used to be able to offer these low prices as well as ensure speed of products entering the country once they were shipped.”
Indeed, the exemption was an integral part of the two retailers’ gargantuan success in the U.S. market. A 2023 congressional committee on China found that Temu and Shein together likely accounted for more than 30% of all packages shipped to the United States each day under the exemption. In just 2024, over a billion packages flooded into the U.S. at artificially low prices thanks to the relaxed restrictions and tax exemptions. Packages filled with a variety of goods some of which were likely made with forced labor. Experts speculate these moves may signal an interest in cracking down on consumer products imported from China.
Leave forced labor with nowhere to hide
The European Union also recently announced it would start controlling imports from “low-value products” from websites like Shein and Temu. The move was part of several new actions to tackle “the surge of unsafe, counterfeit and otherwise non-compliant or illicit products” entering the E.U. While Freedom United supports any legislation cracking down of forced labor, more needs to be done.
The Freedom United community has been working non-stop to shine a light on the exploitative practices of Shein and Temu. Not just in the U.S. or the E.U. but wherever their products are shipped. We applaud any efforts to hold these two behemoth discount retailers accountable for forced labor found in their supply chains.
If you haven’t already, add your voice to those calling on China to stop using forced labor. Whether it’s cars, solar panels or fashion, forced labor should have no place to hide.
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