We'll tough it out: Factories in 'Shein village' feel heat from new US rules

Chinese firms ready for adjustments as they can bank on an unrivalled local supply chain

- Joyce ZK Lim

GUANGZHOU - The clickety-clack of sewing machines rings through factory after factory in Panyu, as rows of workers churn out all manner of blouses, skirts and dresses that will eventually clothe people living as far away as the United States.

Nearby, goods are stacked on floors and tabletops, wrapped in plastic emblazoned with the block letters "SHEIN".

The garment district of Panyu in the southern city of Guangzhou is home to thousands of clothing workshops, many of which supply to the fast fashion giant and other e-commerce platforms.

But these factories now face looming pressure from the administration of US President Donald Trump, whose impending repeal of a crucial trade provision - which has allowed Chinese e-commerce platforms like Shein and Temu to flourish - threatens to squeeze their business.

Mr Trump will scrap the de minimis exemption, as it is called, which allows low-value packages of under US$800 (S$1,070) - including fast-fashion hauls sent to shoppers from Shein or Temu's factories - to enter the US duty-free and via an expedited customs clearance process.

The President had, on short notice, suspended the provision for packages from China with effect from Feb 4, but on Feb 7 delayed its implementation until the US puts the requisite processing systems in place.

Without the de minimis exemption, purchases from China would be subject to standard duties which vary by clothing type, and additional tariffs including Mr Trump's most recent of 10 per cent. Additional processing fees would also apply, as shipping companies deal with more onerous customs clearance requirements.

If US consumers decide to spend their money elsewhere due to higher costs and slower delivery times, it would be a blow not just to the e-commerce giants, but also to the small manufacturers who supply them.