Online bargain bin giants like Shein and Temu have benefitted from long-standing tax breaks forgoing duties on foreign packages under a certain price threshold, but that might soon end.
What happened: Germany has backed a proposal that would end an EU tax exemption for parcels under €150 entering Europe from foreign countries. In the U.S., several bills have been shopped around Congress to change similar exemptions for foreign imports.
Why it’s happening: Experts argue these breaks have been an unfair advantage for Shein and Temu since the parcels they ship are typically under the import threshold. By avoiding duties, they can save money, keep prices dirt-cheap, and continue to snap up market share.
- This effect has been the most pronounced in the U.S., where the cap is US$800, and over 30% of small packages shipped to the country now come from Shein and Temu.
In Canada: A November survey by research firm Stifel Canada found that 50% of respondents had bought something from Shein or Temu within the past three months. The average price of an order from these apps was $67 and $60, respectively — under the CA$150 limit for duty-free foreign imports to Canada.
Why it matters: The sheer number of novelty egg cookers and Lululemon dupes exported daily has overtaxed customs authorities looking for signs of forced labour, clogged up global aircraft shipments, and challenged domestic brands with prices they cannot match.—QH