The US has proposed rules that would hit many low-value shipments from China with new taxes – a measure aimed at curbing the flood of packages from shopping sites such as Shein and Temu.
The Biden administration said the plan was intended to stop “abuse” of an exemption that allowed packages worth less than $800 (£600) to enter the US without facing tariffs and other fees.
The US said the “de minimis” rule has helped firms such as Shein and Temu, which typically ship directly from the manufacturer to the customer, undercut competitors with lower prices.
In statements, the two companies defended their business models.
The US raised the exemption from tariffs and other fees for shipments from $200 to $800 in 2016 to facilitate trade and allow officials to focus on higher priority shipments.
But lawmakers have voiced increasing alarm about “exploitation” by firms such as Temu and Shein, as the two make rapid inroads in the US market.
The new rules would remove the exemption for Chinese goods that currently face tariffs from the US – a wide range of products including shoes, machinery and 70% of textiles and apparel.
They would also increase what information shippers must provide to authorities.
Temu said its success was due to an “efficient business model that cuts out unnecessary middlemen, allowing us to pass savings directly to our consumers”.
It said it was reviewing the rules and remained committed to “delivering value to consumers”.
“Temu’s growth does not depend on the de minimis policy,” it added.
Shein said its success came from its “on-demand business model” and that it supported reform of the de minimis exemption so that the rules were applied “evenly and equally”.
The company said compliance was a priority and that it was already participating in a trial programme with US Customs and Border Protection (CBP).
“We want to disclose more of what’s in every package and are working closely with CBP,” the company said.
Since launching a few years ago, Temu and Shein have gained followers with flashy Super Bowl adverts and ultra-low prices.
The popularity has put such pressure on Amazon, the dominant e-commerce company in the US, that the firm is reportedly exploring its own discount unit focusing on direct-to-consumer shipments.
Their rise has also brought scrutiny from US politicians and regulators, who have raised questions about the safety of products on their sites and warned of a “high risk” that Temu was selling products made using forced labour.
Authorities have blamed their success for putting strains on US border and customs authorities, as the number of packages entering the US under the de minimis exemption has surged from 140 million in 2013 to more than 1 billion last year.
In announcing the action, the Biden administration said “several China-founded e-commerce platforms” now accounted for a “majority” of shipments under the $800 threshold.
It said its actions were a response to an “exponential increase in de minimis shipments” that had made it more difficult to identify and block illegal shipments.
It accused companies of looking to skirt consumer protection laws and avoid trade barriers.
“American workers and businesses can outcompete anyone on a level playing field, but for too long, Chinese e-commerce platforms have skirted tariffs by abusing the de minimis exemption,” said Commerce Secretary Gina Raimondo.
The American Action Forum, a right-leaning policy group, has estimated that getting rid of the $800 exemption entirely would result in “$8bn to $30bn in additional annual costs that would eventually be passed on to consumers”.
The proposal will go through a comment period before being finalised and taking effect.
Authorities in the European Union have been exploring similar measures aimed at low-value shipments, Bloomberg and the Financial Times reported earlier this year.
Shares in PDD Holdings, which owns Temu, fell more than 2% after the announcement.
Read More: US targets China’s Shein and Temu with new shipping rules
