According to EqualOcean, on June 22, 2023, the Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, established by the US House of Representatives, released a report accusing Chinese cross-border e-commerce giants SHEIN and TEMU (Overseas version of Chinese Pinduoduo) of violating US tariff regulations.
Previously, the U.S.-China Economic and Security Review Commission also released a report accusing these two companies of issues in five areas: opaque supply chains, negative impact on climate and environment, intellectual property infringement, tariff and customs evasion, and user data collection, labeling them as the "Five Sins."
The report investigation found that SHEIN and TEMU exploited trade loopholes to import goods into the US and evade paying import tariffs. According to the investigation report, more than 30% of the packages shipped to the US daily may be attributed to these two e-commerce companies, based on the provisions of Section 321 of the Tariff Act of 1930, which sets a "de minimis" threshold.
Under the "de minimis" provision of the Tariff Act, goods with a fair retail value not exceeding USD 800 can be exempt from import tariffs. The investigation results showed that, as of last year, the import volume that met this threshold was close to 600,000 shipments per day, and it may be even higher now.
Lawmakers believe that violating tariff regulations gives TEMU and SHEIN an unfair competitive advantage over US retailers. Currently, TEMU has a valuation of over USD 100 billion, while SHEIN's recent valuation is USD 64 billion.
In 2022, a total of 685 million items entered the US under the "de minimis" provision. TEMU and SHEIN ship nearly 600,000 packages per day to the US using the "de minimis" provision, totaling approximately 210 million packages per year, without paying any import taxes.
TEMU and SHEIN have not responded to the allegations in the report. Previously, TEMU stated that the company is not the importer of goods shipped to the US, while SHEIN denied allegations of forced labor.
EqualOcean has learned that a bipartisan group of US lawmakers plans to propose a new bill aimed at canceling the widely used "de minimis" provision for e-commerce sellers shipping from China to US buyers. If the bill is passed, countries other than China and Russia will still be able to maintain tariff-free entry of their goods into the US by adopting the USD 800 threshold, but only private carriers such as FedEx, UPS, and DHL will be allowed to transport the minimum threshold packages, excluding postal services.
the Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party stated in the report that it will continue to review the documents submitted by both companies and is expected to request additional documents from them.