Have you ever gone into a clothing store and realized that the $60 you walked in with may only afford you one pair of jeans? How much more would it take to buy one outfit for the day, a week? This number quickly adds up. With everyday products and clothing steadily growing, people have turned to cheaper options to save a few bucks. Whether you have shopped at these websites or have been marketed to them online, Temu and other similar China-based online shops have become staples because of their low prices for clothing, shoes, appliances, and jewelry. But how could products half or a third of retail standard prices make a profit and get to your doorsteps? The answer is trade law loopholes and forced labor.

A Congressional Report by Nicholas Kaufman, a U.S.-China Economic and Security Review Commission policy analyst, exposed Temu’s business practices. The report’s focus was Shein, another China-based online clothing shop founded in 2008, which shares practices with Temu that take advantage of shipping loopholes. 

While most companies will send their stock overseas to be stored in a warehouse to be distributed into the country, Temu directly ships products overseas to save money through de minimis, a trade rule that allows packages under $800 to be exempt from taxes. In this way, the affordable price tag plays in Temu’s favor.

“Under-market pricing means Shein is exempt from the standard 16.5 percent import duty and 7.5 percent tariff specific to China,” Kaufman wrote.

This exemption is alarming as the massive amount of small imports crossing the country means a huge profit margin for these companies at the cost of the U.S. This gives them a bigger budget for intensifying advertising. Temu’s 17-million-dollar Super Bowl ad is only one example of how companies like Temu are taking over American markets by using a loophole to keep down costs.

De minimis also exempts such packages from being inspected, which raises quality and legal concerns. Avoiding inspection allows Temu to import resources and work from forced labor, a practice banned in Chinese imports to America under the Uyghur Forced Labor Act. This act was proposed and signed into law after alleged abuse of the Muslim Uyghur population in Xinjiang. 

 “Investigations in 2022 alleged that Shein failed to declare that it had sourced cotton from Xinjiang for its products, a violation of the Uyghur Forced Labor Prevention Act,” Kaufman wrote. Temu is guilty of this as well.

“Temu admitted it ‘does not expressly prohibit’ the sale of goods from Xinjiang and ‘conducts no audits and reports no compliance system to affirmatively examine’ whether its suppliers are observing the U.S. forced labor law,”an Associated Press article reported.

On top of reports of forced labor, cheap labor in facilities also dot the production line, with conditions that don’t comply with Chinese and American Labor laws, these companies exploit people in impossible financial situations to keep costs as low as possible.

“A 2022 investigation by Channel 4 found a pattern of labor practice violations at Shein-affiliated factories in Guangzhou. In one factory, workers were paid the equivalent of $556 a month to make 500 garments a day,” Kaufman wrote.

The blatant use of forced and cheap labor frames the problem as not only a federal issue but a moral one, as consumers must understand the reality of their product’s manufacturing. What good does a cheap piece of clothing do for the world of the individual if it fuels the abuse of others?

This problem has extended beyond Temu, as business models and practices by other China-based companies try to mimic the success of Temu and Shein to penetrate the American market, as expressed in the congressional report. Cider, Urbanic, ChicV, Doublefs, Cupshe, and JollyChic are a few. It’s essential to make informed choices in what we support through spending money on them. To create a better world for yourself and others, people must be able to ask themselves if prices are too good to be true.