Shein pauses London IPO as tariff hit sparks US restructuring plans
Fast-fashion giant Shein has put preparations for its London float on ice while it calculates the best way to respond to Donald Trump’s draconian tariffs on Chinese imports.
According to the Financial Times, the Chinese-founded firm is considering a major overhaul of its US operations, which are especially exposed to the US administration’s sweeping trade reforms.
China was the only country in the world not to be given a 90-day reprieve from the US’s so-called reciprocal tariffs, meaning Shein’s exports to the US face a punitive 124 per cent levy.
And the online retail juggernaut was dealt a further blow by Donald Trump’s commitment to close a longstanding duties loophole – known as the ‘de minimis rule’ – which allows imports worth under $800 to enter without any customs duty.
The rule has been exploited by marketplaces like Shein and Temu, which send individual packages to customers across borders instead of shipping its goods to countries to be processed domestically.
The twin headwinds, which could be compounded if the UK goes ahead with its plans to scrap its own de minimis exemption, have already proved hugely damaging for the low-margin, high-volume online retailer, which generates over a third of its revenue in the States.
The firm’s top brass have been forced to hike prices on some goods for US customers by as much as 377 per cent to pay the fresh taxes. They have chosen to slash online advertising spend in the US to keep a grip on its bottom line.
The constricted operating environment has pushed bosses to rapidly reassess its US operations, with a solution to its trade woes trumping any work going on to prepare the company for its long-awaited bumper IPO.
One executive at the firm told the Financial Times: “We are all focused on figuring out how to deal with the tariff situation at the moment. Before we have clarity on that, no one can even start to think about the IPO.”
The company is reportedly examining whether to relocated the production of goods destined to the US from China to other countries, including Turkey and Brazil. But it would have to majorly ramp up production elsewhere in order to satisfy demand, given the high percentage of its goods currently made in the country from which the firm originates.
Shein’s prospectus to list on the London Stock Exchange was reportedly given the green light by the Financial Conduct Authority last month, paving the way for its controversial listing on the London Stock Exchange to take place within months.
But estimates on the valuation it could fetch have been plunged into uncertainty by the onset of the trade war.
US and Chinese officials are currently engaged in fraught negotiations to bring down the eye-watering tariffs that have caused trade between the two nations to grind to a halt.
Shein did not respond to a request for comment.