Supply Chains Around the World

On 2 May 2025 the United States ended the de minimis exemption for goods from China and Hong Kong. For almost a decade a parcel worth up to $800, sent to one person on one day, had entered the country duty-free under Section 321 of the Tariff Act with minimal data, and the exemption had become the foundation of a new kind of supply chain. CBP reported de minimis shipments of well over a billion a year, about 1.36 billion in fiscal 2024 (reported), and analysts attributed a large share to two companies. Shein, founded in Nanjing in 2008 and later headquartered in Singapore, and Temu, launched in the United States in September 2022 by PDD Holdings, the owner of China's Pinduoduo, sold clothes, gadgets and household goods to American consumers at prices that domestic retailers found hard to believe, and shipped each order as an individual parcel by air from southern China (Chapter 9).

The model was a supply-chain design as much as a retail one. Shein produced new designs in very small first runs through a network of workshops around Guangzhou, listed thousands of items a day, watched what sold and reordered only the winners (reported), which pushed Inditex's logic of small commitments (Chapter 16) to its limit at the cost of air freight. Temu's original "fully managed" model had Chinese manufacturers sell to Temu at a wholesale price and deliver to its Chinese warehouses, while Temu set retail prices, ran the marketing and shipped the parcels. In both, there was no US importer, no US warehouse, no US inventory and, because de minimis entries did not pay them, none of the Section 301 duties of 7.5–25% that an ordinary importer of the same goods paid. American retailers complained that the exemption was a subsidy to foreign sellers; Forever 21's US operator, filing for its second bankruptcy in March 2025, blamed Shein's and Temu's use of it in its court papers (reported).

The end came in two steps: for China and Hong Kong on 2 May 2025, and for all countries on 29 August 2025, a suspension kept after the Supreme Court's IEEPA ruling, made indefinite by CBP rules in June 2026 and upheld by the Court of International Trade on 13 August 2026 (Chapter 9). Temu stopped shipping China-direct goods to US consumers, moved its US listings to local sellers and goods already in US warehouses, and cut its US digital advertising by about 31% in two weeks from 31 March 2025 (Sensor Tower via the New York Times, reported). Shein raised its US prices, passing most of the added tariff cost to customers from May 2025 by its own account, and its US sales were reported about 11% lower in the month after (Bloomberg Second Measure, reported). Its prospectus later said its duty exposure had been 0–62.5% before the closure and 10–87.5% after. When Shein finally listed in Hong Kong on 1 September 2026, after abandoned attempts in New York and London, it sold about 280 million shares at HK$48.56, raising about US$1.7 billion, and the shares fell as much as about 10% on the first day; reports put its valuation at about $25 billion, against a private peak of about $100 billion in 2022 (reported).