US-China trade war: new sanctions hit TikTok, Temu and Shein
The United States government will impose new sanctions on various Chinese online trading platforms, such as Temu, Shein, and TikTok Shop.
The US government has announced new sanctions against several Chinese online trading platforms, including Temu, Shein and TikTok Shop.
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US sanctions target Chinese online giants
With TikTok already under pressure to either change ownership or risk closure within six months, the focus is now turning to the popular e-shopping platforms Shein, Temu and TikTok Shop. The Biden administration is making use of the Uighur Forced Labor Prevention Act (UFLPA). This law, which came into force in June 2021, aims to prevent the import of goods associated with the forced labor of Uyghurs and other Muslim minority groups in China's Xinjiang region. The sanctions follow a series of investigations that have found that products sold on these platforms were manufactured in violation of the UFLPA. These investigations have been ongoing for almost a year.
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The US government has made it clear that these measures are not only a signal to China, but also to the international community that human rights violations and forced labor in particular will not be tolerated. The sanctions are also an attempt to put pressure on China to change its practices in Xinjiang.
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Trade war escalates: USA opens new front
However, it seems more likely that the US will open up the next front to limit the influence of Chinese companies in the US.
The combined market share of the three Chinese companies in the U.S. is currently about 3 percent and could rise to about 5 percent by the end of this year, according to AB Bernstein, a New York-based research and brokerage firm.The affected companies have already begun to respond to the new sanctions. Some have announced plans to review their supply chains and ensure that they comply with the requirements of the UFLPA. Others have called for more transparent reporting on their production processes.
In addition to these measures, Chinese e-commerce companies have been criticized for taking advantage of the United States' de minimis rule, which exempts shipments valued under $800 from U.S. customs inspection and taxation by shipping packages directly from Chinese ports to the United States. US lawmakers have called on the Biden administration to investigate Shein and Temu over concerns about privacy violations.
Shein and Temu: New tactics against US sanctions
To counter accusations that they are undermining the de minimis rule and also enforcing the UFLPA, Shein and Temu have begun building local warehouses in the U.S. and integrating local vendors.
With the latest sanctions against Shein, Temu and TikTok Shop, a new front in the US-China trade war is emerging. At the center of it are Shein and Temu, two online stores whose business practices are considered "dubious" on several levels. The conspicuously low prices raise questions as to whether the retailers can even make a profit under these conditions. There is also uncertainty about how consumer data is handled. The effectiveness of the Uighur Forced Labor Prevention Act (UFLPA) as a means of potentially banning these platforms is controversial. It remains questionable whether such measures actually benefit the Uyghurs or whether they merely serve as a tool in a larger geopolitical conflict.