White House cracks down on Shein, Temu use of tariff loophole

The Biden-Harris administration is cracking down on Chinese-owned fast fashion retailer Shein's and e-commerce platform Temu's use of the de minimis loophole to evade US taxes and tariffs. Temu is owned by PDD Holdings (PDD)

Yahoo Finance senior retail reporter Brooke DiPalma explains the surging use of this loophole as former President Donald Trump has considered expanding tariffs on international and Chinese imports.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Luke Carberry Mogan.

Video Transcript

Bad news for E retailers like Xian and T, the Biden Harris administration cracking down on a popular loophole used by Chinese retailers.

And joining us now with more is Yahoo!

Finds Brooke Dipalma Brook.

Yeah, good afternoon to you both.

It is a crackdown on the de minimis exemption.

Say that three times fast.

It allows items that are $800 or less to be imported without tariffs.

And that's exactly what she and and T have been doing.

Both of them have been able to ship packages directly to US consumers without having to pay these tariffs.

Now Yahoo did reach a Yahoo finance to reach out for common.

Both she and both companies really said that it is their mission to make affordable prices for consumers and also ship products efficiently.

Now, this is a much bigger issue beyond just these two retailers that are really in headlines today.

The administration saying that over the last 10 years the amount of shipments that have used this loop roll has grown from 140 million to 1 billion over the last 10 years.

But we do see stateside some retailers getting a bit of a boost today in the stock market, Etsy up nearly 7% as we approach the close because it really is optimism that should these, uh, should a crackdown go into place, then perhaps Etsy will get a bit of a boost as consumers look for other ways to to shop online or other retailers.

Yeah, and I saw some other analysts chatter that even some of the dollar stores might stand to benefit from all of this.

Um, meanwhile, US companies are also preparing for the possibility that there could be more tariffs after the US election.

What do we know right now?

Yeah, exactly a possibility.

A case scenario, depending upon who wins and how it all plays out.

But, uh, really, what we're looking at here is former President Trump has floated around the idea of a 10% tariff on all imports and a 60% on Chinese imports, whereas Vice President Harris is expected to continue Biden's approach with targeted selective tariffs And what we're really hearing is that over the past few years since that 2018 trade war, these sort of tariffs that have been in place is affecting US households.

Between 203 $100 per a year now.

Other economists are predicting that should Trump go into office and should he implement these universal, that could cost American families between 2000 and some economists even predicting as much as $4000 per year.

But once again, just the case scenario that retailers are potentially preparing for and ones that I've spoken to have said they either have two ideas here.

They are going to have to raise prices for the consumer, or they have been diversifying their supply chain over the past few years.

Skechers CFO saying that their goal really wouldn't be to raise prices, but they might have to.

We also heard from Shark Ninja that they have been over the past five years diversifying their supply chain.

And they did say that, uh, they have plans to ultimately, uh, create all of their production outside of China by 2025.

But then we also hear from Urban Outfitters who said that they plan to decrease their exposes to China with only 10% of their production here.

So lots of retailers trying to figure out these case scenarios, but ultimately at the at the end of the day, the consumer might be pinched.

In the end, OK,