Fast-fashion giant Shein caught a break on Friday when the U.S. decided (at least temporarily) not to eliminate a trade provision the company has used to keep costs low. But the e-commerce site, which moved its headquarters from China to Singapore in 2022, is still in tricky territory as it gears up to possibly go public in London this year.
On Feb. 1, U.S. President Donald Trump moved to scrap de minimis, a rule allowing packages worth less than $800 to enter the country duty-free. Six days later, he agreed to wait until “adequate systems are in place” for the Commerce Department “to fully and expediently process and collect tariff revenue,” according to a new executive action. At the same time, other countries and companies are calling to eliminate tax loopholes that have been critical to the success of companies like Shein. Mexico restricted duty-free apparel imports in January, and the heads of the apparel brands Superdry and Monsoon Accessorize are asking the U.K. to take action in similar ways.
All of this spells trouble for Shein, which is preparing for an IPO in London. On Feb. 7, Reuters reported that Shein was prepared to slash its valuation to $50 billion — exactly half of its $100 billion valuation in 2022 — amid uncertainty around de minimis. (Shein still needs final approval from regulators in the U.K. as well as in China to move forward on its public market debut.) While Shein says its business model doesn’t rely on de minimis, the measure has no doubt saved the company costs, and removing the rule threatens to upend Shein’s profitability. It could also lead Shein to raise prices, analysts have said. Modern Retail reached out to Shein for comment but did not receive an answer by press time.
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