Shein swung to a $99 million (£74.1 million) quarterly loss after the United States eliminated a duty-free exemption for low-value imports, the online fashion retailer announced.
De minimis rule removal
The 'de minimis' tax rule allowed imports worth under $800 to enter the US duty-free, but this ended last year. Now all commercial shipments are fully subject to standard customs duties and tariffs, regardless of value. Shein had benefited from this rule to sell and ship low-value items from China.
Shein stated: '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.'
Loss compared to previous profit
The loss compares against profits of $395 million (£296 million) a year earlier. Sales edged 1.1% higher to $9.05 billion (£6.78 billion). The first-quarter loss, ahead of its planned Hong Kong stock market debut, also reflected a $328 million (£246 million) hit from an accounting change for special investor shares.
EU changes and price increases
In the UK, overseas retailers can send parcels worth less than £135 without import duties, a loophole due to close in October 2028. The EU introduced a temporary €3 customs duty per item on low-value goods up to €150, effective this month, until July 2028 when normal duties apply.
Shein warned that the EU's removal of the small parcel exemption may have a 'material adverse effect on our business, financial condition and results of operations.' It added: '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.'
In response, Shein said: '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.'
