Are fast fashion giants Temu and Shein really under threat from Trump's tariffs?

Australia Broadcast Center

13-05-2025

In early May, US shoppers woke to a different world.
A rule allowing small parcels valued at less than $US800 to enter the US duty free from China had ended. Shein and Temu — the giants of ultra-fast fashion and cheap household goods — had e-commerce business models that thrived under the rule called the de minimis exemption.
While the Latin term de minimis may mean "lacking significance", US President Donald Trump called the exemption "a big scam".
The White House claims ending the exemption is critical to slowing the flow of illegal drugs which it says enter the US under the rule. Monday's trade deal between China and the US lowered tariffs but the de minimis exemption was not reinstated, Reuters reported yesterday.
Some in the fashion industry have celebrated the end of the de minimis exemption as a welcome reprieve from the fast fashion juggernaut. Shein and Temu have been criticised for drastically reducing the time between purchase and landfill, poor working conditions and driving waste in the fashion sector.
ThreadUp, an online platform for selling second-hand clothing in the US, applauded the end of the de minimis exemption. Calling it: "A critical step in addressing the unsustainable flow of ultra-fast fashion into the US."
"We believe that making fast fashion more expensive will incentivise consumers to choose quality, durability, and second-hand options," the company statement said.
The US Customs and Border Protection Agency estimated more than 4 million de minimis shipments entered the US on a daily basis.
It was estimated Shein and Temu accounted for more than 30 per cent of the daily parcels shipped to the US under the de minimis exemption, according to a 2023 US Select Committee investigation.
But rising prices and the chaos unleashed on the global fashion industry thanks to the US-China trade war could further harm sustainability initiatives in the fashion sector.
Taylor Brydges, a research principal at the Institute for Sustainable Futures at UTS, says while the de minimis exemption was fundamental to the low costs Shein and Temu offer, she wouldn't "count these brands down and out".
"They are incredibly agile and nimble and they have seen this coming," she says.
Shein and Temu, platforms that connect customers with manufacturers, are looking to work with domestic American manufacturers and shifting their attention to European and Brazilian customers, Dr Brydges says. Reuters reported last week that Shein and Temu have boosted their spending on digital ads in Europe and Brazil.
Shein and Temu raised prices for US customers in late April, and according to Bloomberg analysis both companies saw double-digit sales declines the following week. But trade experts told Reuters yesterday that the online retailers will likely adapt their businesses and "use the 90-day reprieve [in high tariffs] to bring in bulk shipments and restock their US warehouses". The e-commerce companies had already been reducing their reliance on de minimis and establishing local warehouses.
How customers will react if price hikes in the US are sustained over time remains to be seen. There's a carelessness to the consumption of Shein and Temu products, Dr Brydges says: "You buy lots, it doesn't matter if it fits or how many times you wear it, you just give the charity shop or a friend or throw it out." But she says there's no guarantee price hikes would lead to more considered consumption.
A Temu spokesperson told the ABC: "Temu helps Australians stretch their dollar by cutting out the middleman and offering affordable everyday goods. We're a platform for choice and value, supporting small businesses and enforcing strict standards on seller conduct." Temu did not respond to questions about concerns over labour conditions or waste. Shein was also contacted for comment.
This week, the local fashion industry is celebrating Australian Fashion Week in Sydney. But behind the catwalks and photo ops, businesses are hurting. Jaana Quaintance-James, CEO of Australian Fashion Council (AFC), says many AFC members are dealing with "rising costs, cautious consumer spending and ongoing trade uncertainty".
The end of the de minimis exemption will "disrupt the low-cost, high-speed model" fuelling the dominance of Shein and Temu in the US, Quaintance-James says. "With that market squeezed, they're likely to double down elsewhere — including Australia — raising the risk of even more aggressive tactics and a flood of poor-quality product being dumped into our market."
The AFC is calling for a parliamentary inquiry into the impact of ultra-fast fashion on Australia's fashion industry. Quaintance-James says brands like Shein and Temu "undercut responsible brands with aggressive pricing strategies [and] for consumers facing cost-of-living pressures, the decision between price and principles can be difficult."
In 2023, the AFC launched Seamless — a voluntary scheme where brands pay a 4 cents-per-garment levy to raise money for initiatives to reduce waste, establish a circular economy and reach net zero by 2050. Seamless now operates independently from AFC, but Quaintance-James says its members are encouraged to join the initiative.
Nearly 60 brands of the more than 14,000 operating in the Australian market have signed up, Seamless CEO Ainsley Simpson says.
Simpson says Seamless is calling for regulation: "Seamless is advocating for a level playing field, so all brands clothing Australians are held to account, be they large or small, fast or slow, Australian or international."
Professor Ken Pucker, a fashion sustainability expert in the US, says while tariffs will likely slow consumption and could lead to higher used-goods sales, fashion's sustainability efforts may suffer even more.
In an op-ed for The Business of Fashion, Pucker argues that "Trump's tariffs will assuredly make further decarbonisation progress next to impossible". He wrote that sustainability efforts were already decelerating before Trump's recent actions. Pucker put this down to sluggish growth that led to restructures and staff cuts, a lack of customer interest in green products, stretched resources and an investor backlash against "so-called woke capitalism".
McKinsey analysis published in 2024 found two-thirds of fashion brands included in a study on fashion sustainability were behind on their own decarbonisation goals and "40 per cent had seen their emissions output increase since making their sustainability commitments".
Pucker warns that brands under economic pressure from tariffs "might be tempted to cut corners on labour and climate initiatives". In general, he is critical of market-based voluntary action as the sole means to improve sustainability in fashion. He told the ABC: "Reducing the environmental impact of the industry will require a host of new rules." This includes extending producer responsibility laws and fees to cover infrastructure to create a circular economy, taxes on polyester and carbon, and financial support (from the taxes raised) to aid supplier decarbonisation.
"Fashion remains one of the least regulated industries, where promises of voluntary action [like adopting circular practices, driving eco-efficiency] have proven to be weak responses in light of continued unit growth," he says.