A Shein App is shown within the IOS App Store in Bargteheide, Germany, May 3, 2021.
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WASHINGTON — A House committee exploring economic competition between the U.S. and China on Thursday released a damning report connecting retail giants Shein and Temu to a disproportionate variety of import violations.
The Chinese e-commerce corporations exploit trade loopholes to import goods into the U.S. without paying import duties or making shipments subject to human rights reviews, based on findings released by the House Select Committee on the Chinese Communist Party.
The report found that the brands, which garner most of their consumer base from social media, are likely accountable for over 30% of packages shipped every day to the U.S. under a so-called de minimis provision of Section 321 of the Tariff Act of 1930, which waives import tariffs if the fair retail value of the shipment doesn’t exceed $800. The imports accounted for nearly 600,000 shipments a day as of last 12 months and are likely higher now, based on the findings.
Lawmakers argue the tariff violations give Temu and Shein unfair benefits over U.S. retailers. Temu’s valuation is estimated at over $100 billion, while Shein was recently valued at $64 billion.
The report, which is a continuation of the committee’s investigation into forced Uyghur labor issues that began with a May letter campaign to Nike, Adidas, Shein and Temu, is the primary recording of those findings, based on the committee. Temu is operated by Chinese parent company Pinduoduo.
Each corporations have faced allegations of human rights abuses: Shein for alleged forced labor in its supplier factories within the Uyghur region and Temu for allegedly failing to develop compliance with the Uyghur Forced Labor Prevention Act, the committee reported.
Along with the reduced tariffs, lawmakers say the loophole also enables the businesses to offer less comprehensive data to U.S. Customs and Border Protection — including UFLPA compliance screening — resulting from the big volume of small packages valued under $800.
“These results are shocking: Temu is doing next to nothing to maintain its supply chains free from slave labor,” Mike Gallagher, a Wisconsin Republican and chair of the House CCP Committee, said in an announcement. “At the identical time, Temu and Shein are constructing empires across the de minimis loophole in our import rules — dodging import taxes and evading scrutiny on the thousands and thousands of products they sell to Americans.”
Temu and Shein didn’t immediately reply to a request for comment on the report. Temu has previously said it’s “not the importer of record with respect to goods shipped to the US,” and Shein has denied allegations of forced labor.
Temu has asked its greater than 80,000 Chinese suppliers to just accept language stopping the shipping of products made with forced labor to the U.S. but has taken few measures to deal with the tariff violations beyond the “boilerplate” language, the lawmaker said.
American retailers, meanwhile, pay thousands and thousands in import duties a 12 months. Clothing brand Gap paid $700 million in 2022 in duties, H&M paid $205 million and wedding retailer David’s Bridal paid over $17 million that 12 months, based on the report.
The committee’s investigation continues to be ongoing.
