Shein and Temu prices poised to rise after Biden de minimis proposal

The bottom of the barrel prices that have made Chinese-linked e-tailers Shein and Temu so popular with American consumers could soon rise if the Biden administration curtails their use of a trade law loophole.

The companies, known for their $5 T-shirts and $10 sweaters, could see prices rise by at least 20% if the so-called de minimis provision is changed, a spokesperson for the Republican majority of the House Select Committee on the Chinese Communist Party told CNBC. The committee made the estimate after launching investigations into Shein and Temu more than a year ago.

Neil Saunders, a retail analyst and the managing director of GlobalData, agreed the policy change would likely increase prices, but couldn’t say by how much. 

“If the de minimis exemption is removed, then the cost of products from marketplaces like Shein and Temu will rise. They will still be cheap marketplaces but they won’t have quite the competitive edge on price that they do now,” Saunders told CNBC in an email. “That may lose them some market share or slow their growth, but they will likely respond by pushing into some higher-priced items to balance out their propositions.”

On Friday morning, the Biden administration announced plans to bar overseas shipments of products that are subject to U.S.-China tariffs from being eligible for the de minimis exemption. 

An obscure tariff law loophole that’s been around since the 1930s, the exemption allows packages with a value of less than $800 to enter the United States without the shippers paying import duties and with less scrutiny than larger containers. 

The announcement comes after more than a year of scrutiny into the companies from lawmakers on both sides of the aisle and in particular, the House Select Committee on the CCP. 

Both Shein and Temu declined to tell CNBC if they will raise prices due the proposed changes. The companies also disputed that their low prices are driven by the de minimis exemption and said their business models allow them to offer their ultra-affordable rates.

A spokesperson for Shein noted that the company supports de minimis reform and was recently accepted into a voluntary, pilot program with U.S. Customs and Border Protection where it agreed to provide additional data about packages and shipments.

Over the last couple of years, the two companies have taken U.S. consumers by storm with their ultra-low prices and their ability to rapidly churn out trending styles far faster than competitors can. Shein is estimated to take in more than $30 billion in revenue annually, but it’s unclear what Temu’s sales are. Its parent company, PDD Holdings, saw $34.9 billion in revenue in fiscal 2023 — a 90% increase from the year ago period.

As the companies have become go-to shopping destinations, they’ve taken…