Big surprise: Shein and Temu say they will raise prices
Daily News Article — Posted on April 18, 2025
(CBS and Associated Press) – Shein and Temu, two popular Chinese e-commerce sites known for their low-cost items, say they will raise prices for U.S. consumers starting next week, a move that comes amid President Trump’s 145% tariff on imports from China and the end of a trade loophole.
The sites are popular with U.S. shoppers because of their low prices, with a focus on fast fashion. While they predominantly sell women’s apparel and accessories, both also sell men’s and children’s clothing. Temu carries household items and small personal electronics.
At Shein, women’s blouses cost as little as $5, and bikinis can be found for around $10. Temu offers running sneakers for $14.
Beginning April 25, though, the deals won’t be as enticing for U.S. consumers. In a notice on its website, Shein told customers that “price adjustments” will go into effect late next week. Shein said “recent changes in global trade rules and tariffs” have caused its own costs to rise, making the price hikes necessary. Temu, which is owned by the Chinese e-commerce company PDD Holdings, and Shein, which is now based in Singapore, said in separate but nearly identical notices that their operating expenses have gone up “due to recent changes in global trade rules and tariffs.”
Both companies said they would be making “price adjustments” starting April 25, although neither provided details about the size of the increases. It was unclear why the two rivals posted almost identical statements on their shopping sites.
Since launching in the United States, Shein and Temu have given Western retailers a run for their money by offering products at ultra-low prices, coupled with avalanches of digital or influencer advertising.
The 145% tariff Trump [placed] on most products made in China, coupled with his decision to end a customs exemption that allows goods worth less than $800 to come into the U.S. duty-free, has dented the business models of the two platforms.
The two e-commerce sites have benefitted from a tax law loophole known as the “de minimis” exemption, which has allowed goods worth less than $800 to enter the U.S. duty free. President Trump signed an executive order this month to eliminate the “de minimis provision” for goods from China and Hong Kong starting May 2, when they will be subject to the 145% import tax.
In an April 2 executive order, the White House said that shippers in China have previously used the exemption to “hide illicit substances and conceal the true contents of shipments sent to the United States through deceptive shipping practices.”
“These shippers often avoid detection due to administration of the de minimis exemption,” the executive order said.
Effective May 2, such shipments will be subject to “all applicable duties,” the order states.
U.S. politicians, law enforcement agencies and business groups lobbied to remove the long-standing exemption, describing it as a trade loophole that gave inexpensive Chinese goods an advantage and served as a portal for illicit drugs and counterfeits to enter the country.
Shein sells inexpensive clothes, cosmetics and accessories, primarily targeting young women through partnerships with social media influencers. Temu, which promoted its goods through online ads, sells a wider array of products, including household items, humorous gifts and small electronics.
The changes come at a time when American shoppers have increasingly flocked to the low-cost retailers. The number of de minimis parcels shipped to the U.S. has surged to more than 1 billion in 2023, up from 153 million in 2015, with China accounting for the largest volume of shipments, according to a January Congressional Research Service report. That year, the average package value was $54, according to the report.
From reports published April 17 by Megan Cerullo, CBS MoneyWatch and the Associated Press.
Questions
NOTE: Before answering the questions, read the "Background" below.
1. For what two reasons are the Chinese companies Shein and Temu raising their prices starting next week?
2. What is the de minimis law?
3. How does the de minimis law unfairly impact American businesses like H&M and the Gap?
4. In addition to taking advantage of the de minimis law, what else do Shein and Temu do to keep their prices ridiculously low?
5. a) What groups have been lobbying to remove the de minimis exemption?
b) For what reasons have they done so?
6. How have the number of de minimus parcels shipped to the U.S. increased since 2015?
7. Read the "Background" explaining the unfair business models used by Chinese companies Shein and Temu.
a) What is more important to you: the ability to purchase cheap stylish clothing through these two companies - or to have our government implement policies to end China's unfair business practices? Explain your answer.
b) Would this information change your buying habits with Shein and Temu if the prices remained as low as they are now before the tariffs start? Explain your answer.
CHALLENGE: Read the Fact Sheet explaining President Trump's executive order on ending the de minimis law for China and Hong Kong.
Fact Sheet: President Trump Closes De Minimis Exemptions to Combat China’s Role in America’s Synthetic Opioid Crisis (April 2, 2025)
Do you support the U.S. eliminating the de minimis exemption for China and Hong Kong? Explain your answer.
Background
Shein and Temu's business models are often criticized for being unfair due to practices that give them competitive advantages while raising ethical, environmental, and legal concerns. Below are the key reasons, based on available information and critical analysis:
Exploitation of Trade Loopholes (De Minimis Rule):
- Both companies heavily rely on the U.S. "de minimis" rule, which exempts packages valued under $800 from import duties and minimizes customs inspections. This allows Shein and Temu to ship individual orders directly from China at lower costs, avoiding tariffs that competitors like H&M ($205 million in duties in 2022) and Gap ($700 million) pay for bulk imports. This creates an uneven playing field, as U.S.-based retailers or those importing in bulk face higher costs.
- Critics argue this loophole, originally intended for small personal shipments, is exploited on a massive scale, with Shein and Temu accounting for over 30% of such U.S. shipments. Recent regulatory changes, like Trump’s 2025 executive order tightening de minimis exemptions, aim to address this, but the companies have adapted by increasing local U.S. fulfillment to mitigate impacts.
Alleged Forced Labor and Unethical Labor Practices:
- Shein and Temu have faced allegations of using forced labor, particularly linked to China’s Xinjiang region, where Uyghur minorities are reportedly coerced into producing textiles. A 2021 congressional report highlighted Shein’s circumvention of U.S. laws banning imports from such labor practices.
- Garment workers, often in Southeast Asia, reportedly face long hours, low wages, and unsafe conditions without formal contracts. Temu has been accused of pressuring suppliers to cut prices, potentially exacerbating labor exploitation. These practices allow ultra-low prices but raise serious human rights concerns.
Environmental Harm and Unsustainable Practices:
- Their fast-fashion models promote overconsumption, producing massive waste as low-quality, trendy items are quickly discarded. Shein’s daily release of 500–2,000 new products and Temu’s vast catalog encourage a “disposable” culture, contributing to landfill overflow and pollution.
- Air freight for direct-to-consumer shipping increases carbon emissions, and textile dyeing causes water pollution. Shein’s products have been found with hazardous chemicals exceeding EU safety limits, prompting recalls. Critics call their sustainability pledges, like Shein’s emission reduction goals, greenwashing, as their core model relies on rapid, high-volume production.
Intellectual Property Theft and Counterfeiting:
- Shein has faced lawsuits for allegedly stealing designs from small businesses and independent designers, selling them at lower prices and stifling innovation. Temu’s parent company, Pinduoduo, is on the U.S. Trade Representative’s list for failing to combat counterfeiting, with reports of knockoff products flooding its platform.
- These practices harm original creators and give Shein and Temu an unfair edge by bypassing design costs, flooding markets with cheap replicas.
Market Disruption and Predatory Pricing:
- Their ultra-low prices ($3 crop tops, $6 swimsuits) are enabled by cutting out middlemen, leveraging data-driven demand prediction, and aggressive supplier negotiations. This makes it nearly impossible for competitors like Zara, H&M, or small businesses to match prices without compromising quality or ethics.
- Temu’s reported $1.8 billion in 2023 U.S. advertising and loss-leading strategy (losing $30 per order) suggest a predatory approach to gain market share, which some X posts claim is subsidized by the Chinese government to undercut Western markets. While unverified, this sentiment reflects concerns about long-term market distortion.
Lack of Transparency and Accountability:
- Both companies are criticized for opaque supply chains, making it hard to verify ethical or environmental claims. Shein’s “zero-tolerance” forced labor policy and Temu’s compliance measures are questioned by lawmakers and activists, as independent audits are limited.
- Legal disputes, like Temu’s lawsuit accusing Shein of intimidating suppliers, highlight cutthroat tactics within their ecosystem, further eroding trust.
(from a Grok search "shein and temu unfair business models")