Shein, Temu Face Homeland Security Crackdown Over Type 86 Customs Loophole

U.S. Customs and Border Protection has suspended Seko Logistics from the Entry Type 86 program for 90 days, potentially impacting Shein and Temu.

Impact on Shein and Temu

The Participation of Seko Logistics in the Entry Type 86 program has been suspended by the U.S. Customs and Border Protection Agency for 90 days, The Information reported. Section 321 Type 86 of U.S. Customs and Border Protection regulations permits expedited entry for shipments valued at less than $800.

While the potential impact of suspending a small number of customs brokers on the operations of Shein or Temu is improbable, this development provides hope that the government is starting to address the Type 86 exemption, which could impede Shein's plans to go public in the United States.

Seeking Alpha elaborates that by utilizing the Type 86 program, importers can take advantage of a centuries-old regulation known as de minimis, which waives customs duties on shipments valued at less than $800.

Economic Implications for Fast-Fashion

The daily shipment of millions of packages results in substantial cost reductions for Shein and Temu. Legislators have increased the pressure on government agencies to impede de minimis cargoes from China due to the exemption's potential to indirectly result in the use of forced labor as fast-fashion companies like Shein struggle to meet the demand and undercut U.S. manufacturers.

The Information cites Customs and Border Protection data as saying that 705 million de minimis packages have been imported into the United States thus far in 2024, compared to one million for the entire year of 2023.

Shein's IPO Scrutiny in the UK

Meanwhile, prominent U.K. lawmakers have demanded more investigation into the Chinese fast-fashion behemoth Shein's plans to go public on the London Stock Exchange. Three chairmen of parliamentary committees and other prominent politicians have reportedly demanded greater scrutiny of Shein.

"With Shein's prices so low the London Stock Exchange needs to ask itself, whose suffering is subsiding those prices?" The Conservative chair of the House of Commons foreign affairs committee, Alicia Kearns, stated as much.

Senior British politicians warned that a Shein listing should be blocked during the general election and that the IPO should be subjected to greater scrutiny.

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