Shein Shares Tumble as Trump Terminates Chinese Tax Loophole

Shein executives have moved to calm investor concerns after Donald Trump’s decision to eliminate duty-free treatment for low-value ecommerce shipments from China threatened to disrupt the retailer’s business model and potentially derail its London listing plans.

Donald Tang, executive chairman of the Chinese-founded fast-fashion group, addressed investors this week, emphasising that “growth remains strong” despite the policy change. The existing regulation, which exempts packages valued under $800 from import taxes when shipped directly from China to US addresses, has been instrumental in Shein’s American market expansion.

Market analysts have cautioned that this regulatory shift could severely impact Shein’s operations in the United States, its primary revenue source, and possibly jeopardise its anticipated London Stock Exchange debut. The retailer may face pressure to increase prices, potentially alienating its cost-conscious customer base.

Tang’s letter to investors sought to maintain confidence in Shein’s ability to compete effectively in the US discount clothing sector. The company, renowned for its £7 dresses, is strengthening its supply chain infrastructure to enhance efficiency and delivery capabilities.

The valuation landscape for Shein has shifted dramatically, with current estimates hovering around $30 billion, marking a significant decline from its $66 billion valuation in 2023 and peak valuation of $100 billion in 2022. Shareholders suggest this adjustment is crucial for the success of any potential UK listing.

The retailer’s planned London flotation has faced scrutiny over its environmental, social, and governance standards, particularly following admissions of child labour incidents in its third-party manufacturing network last year. Despite these challenges, a successful listing could represent one of London’s largest deals in a decade, potentially reaching £50 billion.