Shein is Encouraging Manufacturers to Move Production Out of China

Trump’s halt of Section 321 de minimis legislation has Chinese manufacturers scrambling for a way to restart overseas deliveries of small parcels. The de minimis rule previously allowed low-value packages from China to be shipped to the US duty-free as long as declared commercial value was under USD 800. Now that the rule has been struck down, prices of low-cost Chinese goods are expected to rise. More importantly, the USPS momentarily stopped processing shipments from Hong Kong and China in light of the new rule. They have, since then, reversed their decision, but highlighted users may expect logistical challenges in the future. The volume of low-value parcels coming into the US from China has increased tenfold since 2012, and doubled in the last couple of years, so Trump’s tariffs on these shipments is unsurprising.

Similar to the first Trump presidency, manufacturing firms in China have been strategically diversifying their production facilities across Southeast Asia, and Shein encouraging firms to move some production to Vietnam is a seemingly smart decision. The effectiveness of this move remains to be seen.