## Biden Administration Unveils New Regulations Targeting Chinese E-Commerce Giants Shein and Temu
The Biden administration has recently put forth new regulations intended to increase costs for Chinese e-commerce platforms such as Shein and Temu when they ship products into the United States. This initiative is part of a larger strategy to address what the administration refers to as “unsafe, unfairly traded products” entering the U.S. marketplace. The proposed regulations could significantly affect the operational models of these platforms, which have rapidly expanded by providing low-priced goods to American consumers.
### The De Minimis Exemption: A Loophole for E-Commerce Giants?
Central to this situation is the **de minimis exemption**, a U.S. trade policy permitting goods valued under $800 to enter the country without duties. Initially aimed at simplifying customs procedures for low-value shipments, the Biden administration contends that this exemption has been misused by Chinese e-commerce platforms to inundate the U.S. market with inexpensive products, frequently dodging duties and offering inadequate product information.
In a recent statement, President Joe Biden highlighted that shipments entering the U.S. under the de minimis exemption have surged dramatically in the last ten years, rising from 140 million annually to over 1 billion. Biden asserts that most of these shipments originate from China-based e-commerce platforms like Shein and Temu. He argues that these platforms are utilizing the exemption to forgo tariffs and taxes, which creates an uneven playing field for U.S. businesses.
### Effects on U.S. Businesses and Consumers
The influx of inexpensive goods, especially in textiles and apparel, has posed challenges for American companies like H&M and Zara. Biden cautioned that this situation jeopardizes U.S. businesses and complicates the enforcement of trade regulations, health and safety standards, and intellectual property rights. Furthermore, the administration fears that insufficient oversight on these shipments may allow illicit goods, including synthetic drugs like fentanyl, to enter the U.S. market.
Nevertheless, increasing duties on these goods might have adverse consequences for American consumers. Platforms like Shein and Temu have become popular by providing affordable products, particularly during the economic challenges brought on by the COVID-19 pandemic. If the proposed rules take effect, prices for goods from these platforms could escalate, potentially impacting consumers who depend on them for cost-effective shopping.
### Proposed Revisions to the De Minimis Exemption
Biden’s proposal encompasses several notable adjustments to the de minimis exemption. Firstly, it proposes to exclude shipments containing items already subject to tariffs under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962. This would specifically target e-commerce platforms that currently avoid these tariffs by leveraging the de minimis exemption.
Moreover, the new regulations would mandate e-commerce platforms to furnish more comprehensive information regarding their shipments, including the 10-digit tariff classification number and the identity of the individual claiming the de minimis exemption. This enhanced transparency aims to assist U.S. authorities in effectively identifying and hindering unlawful shipments.
### Shein and Temu React
Both Shein and Temu have addressed the proposed modifications, suggesting they are not overly worried about the expected effects on their business practices. A representative for Temu stated that the company’s growth does not hinge on the de minimis policy, emphasizing that its success stems from a streamlined business model that eliminates intermediaries, allowing for affordable product offerings to consumers.
Shein, for its part, has begun to voluntarily disclose more information about its shipments as part of a U.S. Customs and Border Protection (CBP) pilot initiative. The company has also expressed readiness to collaborate with U.S. authorities on reforming the de minimis exemption. In correspondence with the American Apparel and Footwear Association, Shein’s executive vice chairman, Donald Tang, advocated for a level playing field where all companies, irrespective of their country of origin, must adhere to the same regulations.
### Safety and Labor Issues
While Shein and Temu defend their business practices, U.S. regulators have expressed concerns regarding the safety of some products available on these platforms. The U.S. Consumer Product Safety Commission (CPSC) has called for formal investigations into both companies, citing possible safety hazards, including dangerous baby products.
In addition to safety issues, both platforms have come under scrutiny regarding their labor practices. A report from the U.S.-China Economic and Security Review Commission cautioned that Shein and Temu’s business models may involve forced labor in China, especially in the Xinjiang region, where Uyghur detainees are reportedly subjected to forced labor. Temu’s parent company has also been accused by China Labor Watch of requiring employees to work excessive hours, at times reaching 380 hours per month.
### Legislative and Regulatory Prospects
The proposed regulations are merely the initial steps in what
