US Congressional ad hoc committee releases investigation results, Temu and Shein are named again

It is learned that on June 22, according to the Wall Street Journal, the U.S. House of Representatives' Select Committee on U.S.-China Strategic Competition released a report accusing Shein and Temu of violating U.S. tariff regulations, exploiting tax loopholes to evade taxes, and a large number of products of posing a risk of forced labor.

The report is a continuation of the commission’s investigation into forced Uighur labor, which began with a letter campaign to Nike, Adidas, Shein and Temu in May and, according to the commission, is the first recording of its findings.

Under the de minimis import declaration provisions of Section 321 of the Tariff Act of 1930, goods are exempt from import duties if their retail fair value does not exceed $800.

The report pointed out that last year, about 600,000 items were eligible for duty-free imports to the United States every day, and this number may be higher now. According to the survey results, the products of Temu and Shein alone may account for more than 30%, and about half of all duty-free packages shipped from China to the United States.

This gives Temu and Shein an unfair advantage over U.S. retailers, the report argues. The majority of these platforms’ consumers come from social media, the report found, with Temu valued at more than $100 billion and Shein most recently valued at $64 billion.

In addition to avoiding tariffs, Temu and Shein’s small packages also avoid scrutiny by U.S. Customs and Border Protection, which conducts little scrutiny, including screening for forced labor goods, because of the large number of small packages valued at less than $800.

However, the report pointed out that Shein and Temu were both suspected of selling goods using forced labor. Mike Gallagher, chairman of the House Chinese Communist Party Committee, said in a statement that Temu had taken almost no practical measures to avoid forced labor goods, and only required its more than 80,000 Chinese suppliers to agree to terms prohibiting the use of forced labor goods through paperwork.

Temu has not yet responded to the allegations in the report, but has previously stated that "for goods shipped to the United States, Temu is not the responsible importing party." Shein denies allegations of forced labor and says it has implemented a strong system to support UFLPA compliance.

On the other hand, American retailers pay millions of dollars in import tariffs every year. According to the report, clothing brand Gap paid $700 million in tariffs in 2022, H&M paid $205 million, and wedding dress retailer David's Bridal paid more than $17 million. This will further exacerbate the United States' dissatisfaction with Chinese cross-border e-commerce platforms such as Shein and Temu.

Under the influence of Sino-US relations, the United States has repeatedly reviewed and accused Chinese overseas platforms such as Shein, Temu, and TikTok. Not long ago, the two parties in the US Congress also proposed to cancel the tax exemption for small packages. Faced with this situation, overseas platforms have also begun to de-Sinicize, such as moving their headquarters out of China, promoting global diversification of supply chains, and retaining data in the United States and other regions outside of China.

Editor✎ Ashley/

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