Shein, Temu's No-Tariff Imports Hit Roadblock with US Customs Crackdown

Shein and Temu's no-tariff shipments face U.S. customs delays amid increased scrutiny on fast fashion imports.

Brokers Face Increased Scrutiny

Delivery delays and bottlenecks are likely to occur, according to industry analysts, as a result of a new U.S. assault on customs brokers. These brokers handle billions of dollars worth of inexpensive online shopping orders from companies like Temu and Shein, which are linked to China.

This past week, Reuters reported that U.S. Customs and Border Protection announced an expedited clearance program for duty-free, direct-to-consumer imports. They stopped "multiple" brokers from the program, in part due to fears that contraband was being imported through this route. The government body did not reveal how many businesses were on probation, but customs specialists said they knew as many as six.

Fast Fashion Imports in Jeopardy

Among other things, strong consumer demand for fast fashion produced in Chinese factories drives the estimated 1 billion shipments, with an average value of roughly $50, expected to arrive in the U.S. this year, prompting the crackdown.

According to Chad Schofield, co-founder of the U.S.-based e-commerce logistics company BoxC, "All ports of entry are being affected so there really isn't a way to avoid delays."

Increased inspections of such shipments at U.S. airports and evaluations of customs brokers' electronic information submissions are part of a larger effort by CBP.

Election Year Pressures

According to Brandon Fried, executive director of the Airforwarders Association industry group, the Biden administration was under strong political pressure during an election year to safeguard U.S. businesses and stop the flow of illegal drugs into the country, which is why the CBP took this move.

Per MSN, Lawmakers in the United States have voiced concerns that foreign e-commerce companies have an unfair edge over American merchants due to regulations permitting duty-free imports of products below $800. The administration is also accused of not doing enough to put an end to the disastrous fentanyl problem that has been plaguing the entire country.

E-commerce giant Shein, aiming to increase its market share before going public, and Chinese-owned e-retailer Temu rely on the expedited clearance process, which qualifies for direct-to-consumer shipments valued at $800 or less. Brokers in the United States who deal with these shipments electronically provide CBP with shipment details, which speeds up the processing time.

Consulting firm Trade Force Multiplier LLC CEO Cindy Allen noted that 62% of such shipments are cleared by customs brokers who are members of that program, relieving exporters or transportation companies of some administrative work.

Unfortunately, Shein was unavailable for an immediate response. Temu, however, stated that its operations were unaffected.

Photo: Dick Thomas Johnson/Flickr(CC BY 4.0 DEED)