Meaghan Tobin
speaker
50 appearances
1 recordings
1 series
first heard May 2025
last heard May 2025
Meaghan Tobin’s voice in public audio — every appearance, attributed to the second.
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Appearances
So I have a haul.
Are you guys going to miss the prices before the tariffs? Let me know in the comments.
So clothing from Shein is so cheap in part because until a couple weeks ago, it could come into the United States without anyone having to pay any taxes on it, thanks to a tax loophole called the de minimis exemption. But that loophole has now been closed, which means customers in the United States are going to have to pay more to get their fast fashion clothes.
Yes. On Monday, President Trump issued an executive order saying that goods that previously would have come into the United States under this loophole will now be subject to tariffs of 54 percent.
So this loophole is called the de minimis exemption, and it's basically Latin for it's too small to matter. And it started back in the 1930s when the U.S. government was trying to come up with a threshold for which it basically decided it was not worth the effort to collect taxes on imports under a certain value. Right.
So in the 1930s, the de minimis exemption was a dollar, and the de minimis threshold was raised in the 90s as part of a wave of new trade policies worldwide that were based on the idea that more open trade would benefit everybody. And it was raised again to $800 in 2016. Wow, $800. I mean, that feels like a pretty high amount to not pay any tariffs on.
The thinking at the time was that this would help American businesses who relied on imported goods. And it really coincided with a period of time when online shopping took off around the world and also when the Chinese government was pushing businesses in China to find markets overseas. The Chinese government wanted China to be the world's factory.
And so all of that really opened the floodgates into the United States for low-cost goods from China.
Yeah, Shein was one of those companies. And also Timu and Amazon and Walmart all took advantage of this loophole to send a lot of small, cheap packages to the United States from China. But it's Shein that really created an entire business model around it.
So when Shein first started drawing a lot of attention, people compared it to H&M and Zara, early models of fast fashion. But H&M and Zara, the way their business model worked is they would look at runway trends and order a bunch of clothes in advance and then ship it to warehouses in the United States in bulk. And Shein is totally different than that. It's not actually one single brand.
It's an online marketplace that sources from a network of thousands of Chinese factories. And instead of having specific collections for the time of year, they're just constantly creating thousands of different garments every day. And Shein responds essentially in real time to trends.
They have this proprietary system that allows them to place really small orders with really short turnaround times with their suppliers. That enables Shein to avoid the cost of maintaining a lot of inventory. And unlike Zara or H&M, who ship their clothes in bulk to warehouses in the United States, who then distribute it to shops, Shein mails their items directly to customers.
And what's interesting is that because of their proprietary system, they can see how things are selling on the app and quickly notify suppliers that they need to make more. So sometimes when you buy something on Shein, it might not actually even have been made yet.
And so if all of a sudden everyone in your TikTok feed is wearing baggy cargo pants or lime green crop tops, immediately you can also see those being offered on Shein. And if more people start buying them, the platform can quickly ask more suppliers to keep making them. That enables them to offer a huge variety of products on their app for very little money.
So instead of fast fashion, it's more like ultra fast fashion.
Totally. And Shein is not without its critics. There are all kinds of concerns about Shein and ultra-fast fashion. There are concerns about labor practices at some of the factories that supply for Shein. And of course, there are environmental concerns because millions of packages are being flown across the world every day.
And because the prices are so low, it makes the clothes feel almost disposable.
And in the United States, a lot of businesses were angry that Xi'an and other companies were using this loophole and not paying any taxes. They felt that was really undercutting their prices. Like, for example, Forever 21 partly blamed Xi'an and Timu and their use of the de minimis exemption when it filed for bankruptcy earlier this year. And all of that concern eventually reached the White House.
It absolutely plays into President Trump's narrative that particularly when it comes to trade, the playing field with China has not been even. And Trump also says the de minimis exemption was leading to fentanyl and the chemicals that are involved in making it coming into the U.S.
from China because he said drug traffickers were taking advantage of the limited checks on these packages to sneak illegal substances into the country. And all of this is why earlier this month he got rid of the loophole.
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