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Manuel Levitt Discusses Tax Loophole Shein Exploited to Become U.S.'s Largest Fast Fashion Retailer in Fortune

"A Tax Loophole Shein Exploited to Become the U.S.'s Largest Fast Fashion Retailer Might Help It Skirt a New Ban on Forced Labor Too"


Manuel Levitt discussed how the new Uyghur Forced Labor Prevention Act (UFLPA), which bans imports made with materials or labor sourced from the Xianjiang region of China, may have a blind spot, particularly for Chinese brands sending goods directly to U.S. customers. Retail giant, Shein is the world's third most valuable startup and the dominant fast fashion brand in the U.S., occupying 30 percent of the market, and the company has capitalized on quirks of the tense U.S.-China trade relationship to grow its U.S. business. A 2016 U.S. rule that waives import taxes for packages valued at $800 or less – known as de minimis shipments – spares most Shein parcels bound for the U.S. from the extra levy. In the case of the UFLPA, Shein's model of shipping low-value packages directly to consumers could help save them them from a crackdown. "The new law doesn't exempt shipments below a specific dollar value, but policing individual packages would be a resource-intensive operation for the customs agency. [Customs] is not going to scrutinize these little under $800 shipments to the same extent as they would a cargo container full of goods heading to a brand store," Levitt said.