New Biden proposal targets Shein and Temu for ‘abuse’

With just months left in his presidential term, US President Joe Biden wants to cement his legacy by implementing and promoting his consumer protection agenda.

Biden’s presidency has prioritized protecting American shoppers by proposing and implementing rules and regulations that benefit consumers.

Related: Temu unveils new strategy in spark trial

However, Chinese online retail giants like Shein and Temu appear to have found a loophole to avoid a pro-consumer US trade rule.

Joe Biden wants to close loopholes exploited by Chinese retailers.

Chip Somodevilla/Getty Images

A battle of two prominent world economies

Due to the fact that the US and China are two of the world’s largest economies, the US has tried to diversify its supply chain by minimizing its dependence on Chinese products.

However, there is no rule that prohibits US citizens from personally purchasing goods made in China.

Related: Shein Takes Drastic Action Against Fierce Rival

According to a statement from the White House, the number of shipments from abroad to the U.S. that have avoided trade tariffs has increased from 140 million to more than a billion items annually.

The de minimis rule allows packages shipped from foreign countries to enter the U.S. without paying import duties and processing fees, as long as the package does not exceed $800 per day for each recipient.

This rule is intended to protect American consumers, workers, and businesses by targeting and blocking foreign shipments containing unfairly traded or unsafe products that violate US law.

Shein and Temu find a gate

For years, Shein and Temu (PDD) avoided paying additional tariffs to the US on their shipments originating in China by formulating a business model to facilitate this execution.

Because the products of the e-commerce giants are sold at very low prices, shipments usually do not exceed the limit of $800 per customer, which allows them to avoid additional import costs and, in turn, increases their profits.

The earlier investigation raises suspicions against Temu and Shein

In June 2023, the Select Committee published the findings of a forced labor investigation against Shein and Temu.

According to the investigation, 685 million shipments entered the US under the de minimis regime in 2022, with more than 30% of all packages coming from Shein and Temu alone.

In 2022, at least 62% of all de minimis shipments entering the U.S. originated in China, of which about half are suspected to originate from Shein and Temu.

More retail:

• McDonald’s New $5 Meal Deal Isn’t Going As Planned (So Far…)
• MTV turns to innovative AI for money
• McDonalds unveils the latest technology and the employees don’t like it

The investigation found that Shein and Temu exploited the de minimis rule by evading customs enforcement as they ensured their shipments were under $800.

According to the findings, Temu does not have a system in its business model to ensure compliance with the Uyghur Forced Labor Protection Act (UFLPA), which prohibits forced labor goods from China from entering the US.

“All companies operating in the United States have an obligation to clean up their supply chain and ensure they are not contributing to the CCP’s genocide of the Uighur people by facilitating the sale of goods made with forced labor,” said President Mike Gallagher and Ranking. Member Raja Krishnamoorthi of the Chinese Communist Party Select Committee.

Biden’s proposal to bring down Shein and Temu’s mass retail empire

On Friday, the Biden administration announced new proposed rules that would bar the shipment of any product from China that applies to the U.S. trade tariff from reaching American customers without paying tariffs.

In addition, it proposes to exclude tariffs on products covered by sections 201, 232, and 301.

Related: Veteran fund manager sees world of pain coming for stocks