What are the smallest loopholes that make shipping costs higher?
Eliminating the minimal loophole means that items shipped from China valued at less than $800 will no longer be able to enter the United States duty-free.
Fast-fashion retailer Shein blamed the Trump administration’s trade policies toward China for losses in its first-quarter 2026 financial statements as the ultra-low-cost clothing retailer prepares to go public.
The company suffered a loss of $99 million in the first quarter of this year, according to pre-IPO documents filed with the Hong Kong Stock Exchange. The company made a profit of $395 million in the first quarter of 2025, according to the document.
Founded in Nanjing, China and headquartered in Singapore, Shein is at the center of trade tensions between the United States and China. President Trump abolished the mini-miss exemption for imports from China, a trade loophole for low-cost imports, in May 2025.
The company said the measures had a “negative impact” on sales in its largest market.
Shein’s first-quarter U.S. sales were $2.04 billion, down 14.3% from $2.38 billion in the same period last year. The United States accounted for 22.5% of quarterly sales, down from 29.4% of annual sales in 2023.
Shein said China-origin products sold directly by the company or through its marketplace and shipped to the United States are currently subject to tax rates ranging from 10% to 87.5%. Before the Trump administration’s actions, these products were subject to taxes ranging from 0% to 62.5%, the company said.
“In response to increased tariffs and taxes, we are pursuing a range of options, including increasing prices in the U.S. market to offset some of the increased costs,” Schein said. “Based on our cost-plus pricing strategy, we plan to pass on the majority of the increased costs.”
The filing also pointed out that the U.S. war against Iran has affected consumer demand in the Middle East and disrupted shipping routes in the Strait of Hormuz. However, the company said the war “has not had, and is currently not expected to have, a material adverse impact on our overall business.”
Schein faces criticism over EU fees
The financial documents highlighted to investors the pressures facing Shein as it seeks new capital amid rising costs, slowing growth and tighter regulation in key markets.
The European Union, a key market for Shein, also imposed a €3 fee on low-value e-commerce imports this month to curb what it calls unfair competition with China. In 2025, Europe will account for about one-third of Shein’s sales.
“While it is still too early to fully assess, it is likely that the EU trends will broadly match or exceed the effects observed in the US after the US mini-miss exemption is lifted,” Schein said.
Shein has faced criticism from rivals, regulators and advocacy groups over issues such as working conditions at its suppliers’ factories, allegedly addictive features in its shopping app and the environmental impact of mass air transportation.
Mr Shein said the company had a zero-tolerance policy on labor abuse and was investing in risk assessment and mitigation frameworks to protect customers.
Contributed by: Reuters
