Trump's tariff tug-of-war is just part of Shein's problems
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Over the three days since the Supreme Court struck down most of President Trump tariffs, there's been plenty of confusion. But here's one certainty amid the noise.
- The hill to Shein's IPO is just as steep as it was a year ago.
Context: One of Trump's first moves on Friday, in addition to new global tariffs, was to again cut the so-called de minimis exemption, which allows goods under $800 to enter sans tariffs and has been key for Shein and Temu.
Zoom in: Trump's replacement tariffs are limited to 150 days and cannot exceed 15% — which is perhaps why e-commerce stocks have held gains that followed Friday's ruling.
Yes, but: Shein's challenges extend beyond that exemption.
- Trade policy has been a key tenet of Trump's administration, and Chinese companies in particular are under the microscope.
- And it's not just in the U.S. — the EU has launched a probe against Shein over the sale of illegal products. The U.K. — one of Shein's largest markets after the U.S. — is also reportedly seeking to scrap it's de minimis exemption in coming years.
The intrigue: Shein, which filed confidentially for an IPO last year in Hong Kong after an attempt in London, still needs regulatory approval from the China Securities Regulatory Commission.
By the numbers: Financially, Shein has weathered the pressure well with net income guidance of $2 billion (nearly double that of 2024) for 2025, per Bloomberg.
Between the lines: Adding to the confusion, the Supreme Court's decision didn't address remuneration for paid tariffs, which in theory, could also apply to the de minimis executive order (meaning Shein could also recoup some tariff losses from before the weekend).
- Before oral arguments, says Amy Pasacreta, who is of counsel at Orrick, investors were buying the right to the reciprocal tariff refunds for cents on the dollar. As of Friday, that was hovering closer to 40 cents to 50 cents.
- "Will the court of international trade say refunds are the remedy, and if they do, will the refunds get repealed? Then, what is the timing?" she says.
The bottom line: Shein's woes are about more than just the tariffs — it's at the center of widespread geopolitical storm.
