As the US ends its de minimis shipping rule, consumers are bracing for price hikes and shortages, with estimated costs of at least $10.9bn, disproportionately affecting lower-income households.
Deborah Grushkin, a 36-year-old online shopper from New Jersey, recently made a frantic purchase of over $400 worth of items from Shein. The drastic move was triggered by ‘the recent changes to US shipping rules, which aim to crack down on cheap imports from China‘.
Shein is a Chinese multinational e-commerce platform specializing in fashion and 'lifestyle' products.
Founded in 2008, the company has experienced rapid growth, expanding its operations to over 220 countries worldwide.
Shein's success can be attributed to its affordable prices, trendy designs, and efficient logistics.
The company has faced criticism regarding intellectual property infringement and labor practices, but it continues to dominate the online fashion market with sales exceeding $10 billion in 2020.
The Rise and Fall of De Minimis
In the past decade, use of ‘de minimis’ rules has surged, allowing low-value packages to avoid tariffs, customs inspections, and other regulatory requirements. Advocates argue that these rules have streamlined trade, leading to lower prices and more options for customers. However, opponents claim that businesses are abusing the system to slip products that are illegal, counterfeit, or violate safety standards into the country.
Businesses on Brink of Collapse
Many US-based e-commerce brands are warning that the changes could spark failures of smaller firms. Krystal DuFrene, a retired 57-year-old from Mississippi, has nervously been checking prices on Temu for weeks, recently cancelling an order for curtains after seeing the price more than triple. She believes that ‘the cost of her husband’s fishing nets had more than doubled’.
The Toll on Consumers
Economists estimate that ending de minimis will lead to at least $10.9bn in new costs, disproportionately borne by lower-income and minority households. Gee Davis, a 40-year-old author from Missouri, feels that the end of the exemption is ‘a ‘money grab’ by the government to benefit big retailers like Amazon and Walmart’.
A Shift in Trade Policies
The US President’s decision to end the carve-out for low-value packages has sparked concerns about higher costs and shortages. Lori Wallach, director at Rethink Trade, says that the administration is taking steps that will weaken its implementation. Customs and Border Protection deny the move will undermine enforcement, but businesses are taking the changes seriously.
The Future of US Trade
Many smaller American brands that manufacture abroad for US customers are struggling, and may not survive. The Ecommerce Innovation Alliance warns that paired with other tariffs, it becomes an insurmountable shift. Men’s clothing company Indochino has warned that ending de minimis poses a ‘significant threat to the viability’ of its business and other mid-size American firms like it.
Indochino is a Canadian online retailer specializing in made-to-measure suits.
Founded in 2007, the company revolutionized the suit industry by offering affordable, customizable suits to customers worldwide.
With over 100 fabrics and various style options, Indochino's platform allows customers to design their perfect suit from scratch.
Since its inception, Indochino has sold over 1 million suits, making it a leading player in the bespoke suit market.
As the deadline for the changes approaches, consumers are bracing for price hikes and shortages. With many businesses struggling to adjust, the future of US trade looks uncertain.
