Shein’s highly anticipated London stock market debut may face significant delays due to potential US tax changes that could disrupt its core business model.
The de minimis exemption, a long-standing US trade law, allows small packages under $800 (€771.6) to bypass import duties when shipped directly to US consumers. This rule has been crucial for Shein and its Chinese competitor Temu, enabling them to sell ultra-cheap fashion while avoiding the tariffs faced by domestic retailers.
However, Donald Trump’s new trade agenda includes removing this loophole, posing a major challenge for Shein’s US market dominance. If enacted, the policy could force Shein to raise prices or absorb higher costs, potentially weakening its appeal to American consumers.
The proposed tax change comes at a critical moment for Shein, which is preparing for a £50 billion London IPO. Uncertainty over US import costs may complicate investor confidence, leading Shein to delay or reconsider its listing strategy.
The concern extends beyond the US, as the UK and EU may also consider similar tax policies. If customs duties increase in multiple regions, Shein’s low-cost business model could be under serious threat.
If import duties increase, Shein may pass the added costs on to consumers. This could erode its market share, as low prices not quality are its main selling point in the US.
The de minimis exemption has been widely criticized for its overuse, particularly by Shein and Temu, whose business models rely on avoiding tariffs. US authorities have raised concerns that the exemption is:
- Hurting US businesses by allowing foreign companies to undercut domestic retailers.
- Being exploited for illegal trade, with small packages frequently used to smuggle counterfeit goods and narcotics.
- Overwhelming US customs operations, with officials at JFK Airport processing 750,000 to 1 million de minimis shipments per day far beyond their screening capacity.
The US Customs and Border Protection (CBP) reported that in 2023, 85% of seized shipments containing illegal goods were small packages.
For now, Shein’s London listing remains in limbo, with Trump’s trade policies casting doubt over its financial future and competitive edge.
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