Fast-fashion giant Shein is reportedly exploring restructuring its US business, as the ongoing trade war between the US and China threatens its long-rumoured London float.
The retailer’s US business accounts for around a third of its total $38bn (£28.5bn) and is set to come under heavy strain after the Trump administration closes the tax exemption ‘de minimis’ loophole later this week.
The FT reports that this will leave Shein, which imports to the US directly from its Chinese warehouses, paying 120% tariffs on its cheap clothes to sell into its biggest market.
The brand is reportedly considering diverting production for the US market to countries outside of China, including Brazil and Turkey.
However, with supply chain capacity in those regions limited, there are doubts whether Shein would ever be able to reach the required scale to match its Chinese operations and its network of over 7,000 suppliers.
As a result, shifting production would result in a significant reduction of supply into the US.
The retailer must also walk its own fine political line at home, with any moves to shift manufacturing out of China likely to incur the wrath of its government.
While the Shein board has not yet made any decision on US restructuring, it is thought that if the trade war between Trump and China drags on, it could have a lasting impact on the retailer’s long-awaited float on the London Stock Exchange.
“Internally 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,” one executive told The FT.
The retailer has already increased prices on products being sold into the US ahead of the implementation of higher tariffs by the Trump administration.
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