Temu and Shein Face Challenges as Countries Tighten Rules for Small Package Imports

Chinese e-commerce platforms such as Temu and Shein are encountering fresh challenges in exporting low-cost products to international markets due to new stringent import regulations by countries like the United States. These obstacles mainly stem from the U.S. introducing firmer control over small package imports. [para. 1]

On January 11, U.S. Customs and Border Protection (CBP) announced new guidelines targeting shipments sent to the same individual via different channels on the same day or declared for import, surpassing the $800 threshold. The CBP’s Automated Commercial Environment system will monitor shipment declarations for discrepancies, ensuring that any irregularities, such as altered or omitted declarations, do not bypass this value limit. These irregularities could lead to customs clearance delays, detentions, or additional fees. [para. 2][para. 3]

This rule adjustment is the second this year to strengthen the “de minimis” trade provision, Section 321, which allows duty-free entry for shipments valued under $800, provided they are addressed to individuals. Initially established in 1930, the threshold grew from $200 to $800 in 2016. [para. 4] A third update expected before February 11 will necessitate taxable import declarations and duty payments if the duty-free limit is exceeded, with noncompliance leading to the withholding of goods. [para. 5]

The small-package exemption has significantly benefited platforms like Shein and Temu, major players in cross-border e-commerce, as well as large retailers such as Amazon and Walmart, who ship products directly from China to U.S. consumers. [para. 6] According to a report from the U.S. House Select Committee on the Chinese Communist Party, Temu and Shein together represent over 30% of all de minimis packages sent to the U.S., with over 1 billion such packages entering the country in 2024—a fivefold rise since 2016. [para. 7]

However, Chinese companies have faced criticism for leveraging this rule to skip duties and inspections. The U.S. Department of Homeland Security announced more stringent checks on small-package shipments in April to prevent illicit goods from entering the U.S. market. [para. 8] Aiming to protect American workers and industries, the Biden administration has proposed rules to exclude tariff-affected products from customs exemptions. [para. 9]

The market is closely watching whether the U.S. will increase taxes on small packages. Despite the challenges, the U.S. market remains lucrative due to its size and profitability. However, potential policy shifts, especially concerning the $800 threshold, could shape future prospects, notably if lower thresholds decrease demand for Chinese goods. [para. 10] Industry perspectives suggest that if thresholds were reduced to $200, platforms like Temu and Shein are unlikely to suffer severely due to their generally low average product prices. A small increase in tariffs would not erode their price advantage completely. [para. 11]

Other countries are also tightening regulations. Mexico, for instance, has imposed new tariffs on small package imports to curb exemption abuses, affecting primarily sellers directly shipping from China. This policy necessitates a price adjustment for sellers to maintain competitiveness. [para. 12][para. 13] Similarly, Brazil has terminated its duty-free policy for packages under $50, while Vietnam plans to eliminate the VAT exemption on small imports, addressing tax revenue losses. [para. 14][para. 15]

Vietnam is also intensifying cross-border e-commerce scrutiny. Recently, the government instructed Temu to halt operations until it completes registration, and Shein's Vietnamese site became temporarily unavailable. [para. 16]