Shein has fallen to a loss after revealing that US President Donald Trump’s removal of an import duty exemption on small packages hurt sales. The news comes ahead of the fast fashion group’s planned stock market debut in Hong Kong.
The group reported net losses of $99m (£74m) for the three months to March, compared with profits of $395m (£296m) a year earlier. Sales edged up 1.1% to $9.05bn (£6.78bn).
Accounting change and trade war impact
The first-quarter loss was largely due to a $328m (£246m) hit from an accounting change for special investor shares. However, the figures also laid bare the impact of Mr Trump’s trade war.
In May last year, the US removed a so-called “de minimis” tariff exemption on small packages, which Shein had previously used to ship garments from China directly to customers. Earlier this month, the EU imposed a €3 (£2.56) duty on small parcels imported from outside the bloc.
Sales and pricing response
Shein said: “Since May 2025, the removal of the US de minimis exemption has had an adverse impact on our sales in the US and the overall growth of our net revenues.” It added that it had “since observed signs of normalisation in consumer purchasing behaviour and sales trends in the US”.
The group warned that the EU’s removal of the exemption may also have a “material adverse effect on our business, financial condition and results of operations”. Given that Shein made around a third of sales from Europe last year, the impact could be larger than that from the US. “Although it remains too early to fully assess, it is possible that trends in the EU could be generally in line with or exceed the impact observed in the US after the removal of the US de minimis exemption,” Shein cautioned.
The group is looking at raising prices in the US and Europe to offset the impact. “In response to the increased duties and taxes, we are pursuing a wide range of options, including increasing our prices in the US market to offset a portion of the increased costs,” it said. It acknowledged a possible “short-term adverse impact” to sales in Europe but said the long-term impact is too early to assess.
UK review
The UK is also considering closing the small parcels loophole, but not for some years. Former Chancellor Rachel Reeves confirmed plans in the 2025 autumn budget to review the customs loophole, saying she wants to “support a level playing field in retail”. The proposed reforms are not expected until 2029, prompting calls from high street retailers to bring this forward.
