By John F. Di Leo, Opinion Contributor
If you think bringing American manufacturing jobs back is a steep climb, it’s nothing compared to one of the key efforts this year: saving America’s retail sector.
Retail is absolutely critical to the American way of life. Shops fill our malls and business districts; they draw customers to our restaurants and movie theaters, they create important part-time jobs for students and adults, and for those of you who like taxes, retailers produce sales taxes and property taxes and income taxes, and by employing people, they provide income taxes and FICA taxes as well.
Retail is everything from the single-location gift shop to the department store chain, run by sole proprietors and big conglomerates. It has always been an opportunity for advancement in an array of careers, from purchasing to sales, from customer service to design, from security to IT, from advertising to logistics.
But retail has come under attack in recent years, in a variety of ways that few industries have had to confront all at once. Much like the proverbial “two-front war” that military studies are concerned with, the retail sector has been assaulted by unsustainable increases in the minimum wage, a fear of being out in the public (promulgated by the Covid extremists), a doubling of transportation costs due to a man-made energy crunch, crippling inflation leaving their customers with less spending money, and an explosion of crime caused by wide open borders and a refusal of blue states to even try to catch or prosecute thieves.
And then there’s the growing competition from online shopping with Amazon and the big box stores.
But for much of the retail sector, from toys to jewelry, from fashion to knick-knacks, all these slings and arrows pale next to the competition from the cheap Chinese online retailers like Shein, Alibaba, Wish (which is ostensibly US-based), and the amazingly fast-growing giant of the group, Temu.
To fully understand this problem, we need to review a bit about the import and export process.
Normally, in international commerce, an importer must agree to buy a large shipment, hopefully filling every square inch of a 40’ (or even 45’) shipping container, in order for that costly international shipping to be affordable when split up across the contents of the order.
And when that shipment arrives in the destination country, the importer hires a Customs broker to analyze his vendor’s invoice, identifying the right classification for each of the dozens (or hundreds) of items in the shipment, figuring out that the importer owes 5% on this item and 10% on that one, 2% and on this one and 20% on that one, and so forth (every imaginable item has a different classification and import duty rate, not only in the USA but in almost every country).
Customs broker pricing is based on the variety in the order; a simple shipment of a single product will be relatively cheap (when spreading that $150 to $200 across an entire container of goods). It gets more expensive as more different products are included, typically charging $3 to $10 per classification, which is still cheap if that $3 to $10 is spread over a hundred or a thousand of the same thing in the large order. Shipping just one of this, and one of that – “ordering eaches” as they say – would be prohibitive.
No matter whether the importer is a small shop or a big box chain, he has to pay duty (and sometimes additional punitive tariffs like the ones now assessed on Chinese goods), before he can receive his shipment. This transportation and duty cost is part of the burden he must build into his sale price.
Unless he’s Shein, Alibaba, Wish or Temu.
These cheap Chinese online merchants have devised a way around it (with the help of the Obama administration).
In most countries, there has always been a Customs program for tiny, very low-value shipments like engineering samples, known as the de minimis clearance. Customs figures that if it costs the importer $150 to hire a Customs broker to create the Customs forms on a little sample shipment worth only ten or twenty dollars, which would only produce a dollar or two of import duties anyway, then “the juice isn’t worth the squeeze,” as the saying goes, for either the importer or the government. Most countries therefore exempt such small shipments from the clearance process, and they come in duty-free and Customs clearance process free. Most countries set the threshold for these at about $40 or $50 (in US dollars). The USA used to set it at $200. It’s a cheaper clearance when performed by a Customs broker, and the clearance is often included for free when performed by a small parcel courier.
During the Obama years, our administration decided to be especially generous, and raised that threshold to shipments as high in value as $800. For over a decade now, if a Chinese shipper used either the mail or a small parcel courier like UPS, DHL and FedEx to ship it, a shipment under $800 in value would therefore be Customs clearance free, duty free, tariff free, and labor free.
This virtually created an entire industry of cheap online merchants, who could bypass not just the brick and mortar of your local store, but also the taxes and other regulatory processes with which the rest of the retail world must still comply.
There are approximately 1.36 billion of this kind of imports per year now – that’s about four million per day. Originally intended for the occasional import sample between normal businesses that usually ship container quantities back and forth, the de minimis process is now the entire business model of a group of companies that utilize this method to undercut their legitimate competitors, getting themselves exempted from the clearance costs, management burden and Customs duties that your college kid’s part time job at the toy store has to rigorously pay for.
Why are Temu, Shein, Alibaba, Wish and the others so cheap? It’s because they’re taking advantage of an incredibly uneven playing field.
The Western world realized this problem a couple of years ago, and various countries in Europe, Canada, and elsewhere have been trying to crack down on their de minimis rules, but with a whopping $800 threshold in the USA that the Biden-Harris regime dragged its feet on reforming, this global problem can’t be solved until the USA solves it here, in the world’s biggest single market.
When people order from these Chinese online discount houses, their products are jammed together, packed as tightly and cheaply as possible, with hundreds of other items. The values are often underdeclared, their country of origin unnamed, and their descriptions are vague, certainly too vague for a Customs broker to identify the right duty rate for it.
And when we say there are four million de minimis shipments per day, and we remember that each Temu order contains dozens or even hundreds of unrelated cheap items, we see that we’re talking about tens of millions or even more of these cheap individual products, flowing in as from a cornucopia, in bulk, to swamp our markets and keep Americans from shopping in normal stores.
The Trump administration is trying to take the heat and do what’s needed; they’re in the process of stopping these orders, millions of them each day, in order to force these foreign competitors to play under the same rules as everyone else in the retail world must.
If your local gift shop, dress shop, toy store or department store had to pay 3% or 10% or 15% in duty on something – and if it was from China, they probably also had to pay another 7.5% or 25% on top of the duty, since the first Trump administration – then it’s only fair that this Temu or Shein order should pay it too.
And if your local retailer, or his headquarters office, had to staff Customs experts to work with their broker to explain what each line of an invoice was, and sort out whether a product falls under this classification or that one, whether it falls under an anti-dumping duty or countervailing duty program or quota, etc., then it’s terribly unfair that these Chinese predators can just blow past that need as well.
Over the past few weeks, these cheap Chinese bottom-feeders – especially Temu – have found themselves suddenly contacting Customs brokers all over the country, trying to figure out how to import goods in accordance with the rules they’ve been disregarding for so long. They learn the price of a clearance, the price of a Customs continuous bond, and best of all, the information they need to provide for classification.
“What is it?” the broker asks.
“Look at the invoice,” says the Chinese knockoff provider. “It’s a shirt.”
“Yes, I see that, but what kind of shirt? Men’s or women’s? polyester or cotton or rayon or silk or a blend? And if a blend, then what percentage? Is the fabric knit or woven?”
Comes the response: “Huh?”
And with Temu, that conversation must now occur a hundred times per shipment.
The USA isn’t being unreasonable. Like it or not, this is how import classifications have been done for centuries. Governments protect one industry or another, by setting different duty rates depending on what the product is. Over the course of time, the book got to be about four inches thick in small font, with tens of thousands of classifications and a wide array of applicable duty rates.
And the rest of the world is fine with this too. Every industry from manufacturing to retail can live with these rules. They all ensure that the necessary information is clearly printed on the invoice. The volumes involved in normal shipping make it worthwhile.
But Temu – and the others like them – have been living in their own world and getting away with it, for years.
The higher the punitive tariffs are against China, by the way, the more of a discrepancy this would be, if it’s not resolved. So it must be resolved, and soon. As soon as possible.
Suddenly, they are going to find that their business model won’t work anymore, when the clearance fee alone on an 800-item invoice is thousands of dollars, and the duties and fees are just as high or higher.
There’s a reason why that dress or toy or appliance or knick-knack is $20 at the store and $4 on Temu. And letting Temu get away with this is killing more and more American stores, chains, and malls every single day that goes by.
There are other parts of the Trump agenda that will help the retail sector. Closing the border and jailing or deporting tens of thousands of criminals will help reduce the crime wave that has crippled our malls; removing the DoJ’s abuse of police departments will help enable local police to do their jobs of arresting and prosecuting robbers, shoplifters and flash mobs again. Cutting taxes will help, of course, and freeing the energy sector from green insanity will reduce both the utilities that cost so much for a well-lit store and reduce the transportation cost in delivering product from vendor to store.
But all these things won’t help save the retail sector if people just don’t shop because they assume that if Temu and Shein can sell stuff so cheap, their local retailer must be ripping them off, or they assume it’s the cost of brick and mortar that explains the difference alone.
Without understanding the above, the average shopper would never dream that it’s actually the Temus and Sheins who are ripping off the marketplace, through a competition on a level of unfairness heretofore unseen in human history.
250 years ago, our Founding Fathers fought a revolution, in part, because the British government had given a sweetheart deal to the British East India Tea Company so their tea could dominate the market across the colonies.
Today, we don’t need a revolution to bring fairness to our marketplace. Just some rational corrections to a lot of cockeyed American policies that thoughtless or malevolent politicians and bureaucrats have put in place over the years.
And fortunately for us – maybe just in time – the Trump administration is on the job.
Copyright 2025 John F. Di Leo
