EU Eyeing Import Duties That Would Stunt Shein, Temu

Shein has a new headache that could impact growth plans.

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The impossibly cheap exports hawked by China-based e-commerce titans are reportedly under the microscope of European regulators.

The Financial Times reported that the European Commission is putting together a plan that would impose customs duties on low-priced imports from online retailers—a move that would target the likes of Shein, Temu and AliExpress by lowering the current duty-free threshold of 150 euros ($161).

The proposal, expected to be unveiled at the end of this month, will then need to be approved by the European parliament.

The European Union isn’t alone in its concern about the deluge of imports and their impact on domestic and local industries. In the U.S., lawmakers have been debating reforms to the de minimis rule , which allows shipments worth $800 or less into the country duty-free. South Africa on Monday closed its de minimis “loophole,” with small overseas shipments valued at under 500 South African rands ($27) now taxed at the same rate as larger ones.

Critics believe de minimis loopholes have aided the growth of ultra fast-fashion e-tailers due to an operating model that exploits key advantages over competitors—namely, not having to pay import duties on small shipments. Closing the loopholes is about leveling the playing field so all companies can compete fairly without any unfair advantages, de minimis detractors say.

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Shein in February 2022 was eyeing an initial public offering in the U.S., but scrapped those plans after Russia’s attack on Ukraine, which caused chaos in the financial markets. Since then, Shein has drawn intense scrutiny from American lawmakers over its Xianjiang links to alleged forced labor. Shein has consistently said it has “no tolerance” for forced labor.

The Chinese fast-fashion firm began looking elsewhere to float its IPO, and London became a viable option. Word surfaced last month that Shein had confidentially filed IPO plans in the U.K. Capitol. But even before the confidential filing, there were rumblings that Shein could face similar regulatory hurdles . With upcoming U.K. elections on Thursday, the company’s plans could change again.

A Shein spokesperson could not be reached by press time.

Shein has consistently declined comment on queries related to a potential IPO filing. As for potential London IPO concerns from British lawmakers, the company has said to media outlets that it does pay required U.K. taxes. It also has told Sourcing Journal that its Modern Slavery Statement is published and publicly available on its U.K. website.

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