Zara executive advocates for closing tax advantages in the fast-fashion sector
Fashion Titan Takes Aim at Global Competitors
The big boss of Zara's parent company, Inditex, has sounded the alarm on a US-inspired clampdown needed to tackle the flood of small-goods imports from China and Europe.
Enterprises such as Shein and Temu have caused quite the commotion in the global fashion industry, putting older brands in a tight spot. One of their secrets to success? Leveraging a tax flaw called "de minimis," which grants duty-free entry to tiny shipments of goods.
Last year, an astounding 30 percent of the packaging flowing into the States utilizing the 'de minimis' rule can be attributed to Shein and Temu alone[2].
Oscar Garcia Maceiras, the man in charge at Inditex, expressed his desire for a level playing field to the BBC. He emphasized the need for a set of equal rules for all competitors[2]. Earlier this year, President Trump abolished the tax loophole for products shipped directly from China and Hong Kong[1][3][4]. The UK, too, has initiated a review of the policy.
Chorus of Concerns from Retail Leaders
Maceiras isn't the only retail tycoon voicing this concern.
George Weston, CEO of Primark's parent company Associated British Foods, regards closing the loophole as a step in the right direction for UK businesses[2]. Simon Roberts, CEO of Sainsbury's, echoes this sentiment, urging the government to enact the modifications promptly to discourage the diversion of subpar goods from the United States to Europe due to Donald Trump's tariffs[2].
Alex Baldock, head honcho at Currys, told the Financial Times, there are already indications of stock being redirected into European markets in a not-so-subtle dumping strategy[2].
"The likeliest destination for a substantial portion of this stock in my sector – at least for now – is from powerhouses like Shein, Temu, Alibaba, TikTok shops, and, you guessed it, Amazon Marketplace," Baldock disclosed, adding that numerous Chinese vendors are in play[2].
City A.M. has reached out to the Treasury for comment.
The de minimis rule currently applied in Europe allows free importation of low-value items, mirroring the US exemption, which President Trump recently abolished for shipments from China and Hong Kong[1][3][4]. This loophole has benefited Chinese e-commerce companies, granting them a competitive edge in the European market.
However, there is talk of axing or altering this loophole due to concerns regarding "dumping" by Chinese companies, which retailers argue jeopardizes fair competition[1][5]. The European Union is mulling changes to address these concerns, but specifics on when and how the modifications might take effect remain unclear.
- The CEO of Primark's parent company, Associated British Foods, George Weston, supports closing the loophole on duty-free imports of tiny shipments as a step forward for UK businesses.
- Simon Roberts, CEO of Sainsbury's, urges the UK government to act quickly on modifying the policy to discourage the diversion of subpar goods from the United States to Europe due to President Trump's tariffs.
- Alex Baldock, head of Currys, revealed concerns about stock redirection into European markets due to a strategic dumping by powerhouses like Shein, Temu, Alibaba, TikTok shops, and Amazon Marketplace.
- Chinese e-commerce companies, such as Shein and Temu, have benefited from the de minimis rule in Europe, which grants them a competitive edge in the market.
- The European Union is considering changes to the de minimis rule to address concerns about "dumping" by Chinese companies, which retailers argue poses a threat to fair competition.
