Dozens of garment factories in China’s “Shein Village” have halted operations in recent weeks due to the Trump administration’s tariffs and the end of the “de minimis” exemption, which allowed online retailers to ship cheap, duty-free goods to the U.S.
Factories in Guangzhou’s Panyu district, once bustling with Shein supply work, are now quiet, with unsold inventory piling up. Workers say orders from Shein have significantly dropped this year.
The change, effective May 2, means all shipments to the U.S. will face import taxes, putting pressure on online retailers like Shein and Temu, who rely on this tax exemption to keep prices low. This shift adds to the challenges already facing China’s economy, which is struggling with slow growth and a weakened real estate sector.
Some suppliers have shifted operations to Vietnam to avoid the tariff impacts, but smaller factories are simply closing down.
Li Lianghua, a business owner from Hunan, has stopped taking orders from Shein and now focuses on social media marketing.
In Dongguan, manufacturers of leather goods and bags have also seen contracts disappear, with one factory losing $150,000 in business.
The situation is grim for U.S.-bound Chinese exports, which surged ahead of the new tariffs but are expected to decline starting this month as tariffs rise to 145%.
With deflationary pressures in China, competition is expected to increase in Asian markets, possibly leading to price cuts and shifts in global trade dynamics.
