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Mexico Implements New Tariffs, E-commerce Giants Like Shein and Temu Could Be Affected

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Mexico’s tax authority, SAT, introduced new tariffs on Tuesday aimed at strengthening the surveillance of goods imported from Asia. This move may significantly impact popular online retailers like Shein and Temu, as both companies are based in China, which does not have an international treaty with Mexico.

Under the new regulations, goods entering Mexico through courier companies from countries without such treaties will be subject to a 19% duty. Goods entering from Canada and the U.S., which are part of the United States-Mexico-Canada Agreement (USMCA), will face a 17% duty if their value exceeds $50 but is under $117. Additionally, goods valued over $1 from countries with international treaties with Mexico will also be charged a 19% duty.

The SAT stated that the new tariffs were designed to combat “abusive practices” and that goods previously exempt from duties will now be taxed. These changes, effective from January 1, align with broader tax reforms targeting e-commerce. On December 19, President Claudia Sheinbaum’s administration announced a decree imposing import duties of up to 35% on various goods, including clothing and home products, to curb tax evasion and ensure fair competition for local businesses.

This decision could disrupt Mexico’s IMMEX program, which allows foreign companies to import goods tax-free for U.S. market sales. E-commerce giants Shein and Temu, in particular, could face challenges due to the higher tariffs, as they compete with established U.S. retailers such as Walmart and Amazon.

 

TikTok Shop Gains U.S. Market Share Amid Potential Ban Threat

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TikTok Shop, the e-commerce platform launched by TikTok in September 2023, is making significant strides in the U.S. market, especially during the holiday shopping season. Despite the looming threat of a ban on TikTok by U.S. regulators, the platform has reported strong spending patterns, capturing attention from consumers and merchants alike.

According to TikTok’s own estimates and a Reuters analysis of spending data from Facteus, TikTok Shop has gained ground as a popular e-commerce destination. On Black Friday alone, TikTok Shop claimed $100 million in sales, a figure suggesting it is becoming a strong competitor to platforms like Shein and Temu. While Reuters could not independently verify these claims, data from Facteus shows that U.S. spending on TikTok Shop in the week leading up to Cyber Monday surpassed spending on both Shein and Temu.

TikTok Shop operates as a marketplace for major brands, such as e.l.f. Cosmetics and Ninja Kitchen, as well as smaller third-party vendors. Merchants use TikTok’s social media app to promote their products through targeted ads and influencer collaborations, taking advantage of the platform’s 170 million U.S. users. Additionally, TikTok Shop offers live shopping sessions, where consumers can purchase items directly during live-streamed events. These features have driven a sharp increase in monthly live video sessions, which TikTok says have tripled in the past year.

User Adoption and Shopping Trends

For U.S. consumers like Jasmine Whaley from Pennsylvania, TikTok Shop has become a go-to platform for finding deals on clothing, skincare, and other products. Whaley notes that TikTok’s algorithms “curate content and products” she enjoys, often delivering her purchases faster than competitors like Amazon. She estimates she’s spent nearly $700 on the platform this year, highlighting its growing appeal.

TikTok Shop merchants fulfill orders directly, with some leveraging third-party services or TikTok’s own fulfillment infrastructure to expedite shipping. The platform has also attracted vendors by offering lower fees to boost their competitiveness in the U.S. market, mirroring tactics used by rivals Shein and Temu.

TikTok’s Regulatory Challenges

The success of TikTok Shop comes at a precarious time. A U.S. federal appeals court recently upheld a law requiring ByteDance, TikTok’s Chinese parent company, to divest TikTok in the U.S. by early 2024 or face a potential nationwide ban. If enforced, such a ban would also likely extend to TikTok Shop, raising concerns for merchants and brands relying on this revenue stream.

Erik Huberman, CEO of Hawke Media, emphasized the platform’s unique value for sellers, stating, “TikTok Shop is a new distribution channel, and brands are doing really well on it. Honestly, there isn’t an alternative. It will be a lost revenue stream.”

Competitive Edge in E-Commerce

TikTok Shop’s integration of social media and e-commerce provides a distinct advantage. By blending engaging short videos, influencer promotions, and live shopping events, TikTok has “cracked the code” in creating a seamless shopping experience, according to users like Whaley. This approach not only drives impulse purchases but also builds brand loyalty.

The platform’s ability to compete on price, shipping speed, and user engagement has allowed it to outpace rivals during critical shopping periods. Facteus, which analyzed spending data from 140 million consumer credit and debit cards, revealed that TikTok Shop’s holiday spending surge outperformed its competitors in terms of market share.

Future Outlook

While TikTok Shop is enjoying rapid growth, its future in the U.S. remains uncertain. A potential TikTok ban could derail the platform’s e-commerce ambitions, leaving merchants and influencers scrambling for alternatives. Despite the regulatory risks, TikTok Shop’s innovative approach to merging content with commerce has positioned it as a key player in the evolving e-commerce landscape.

For now, TikTok Shop continues to capitalize on its social media dominance, offering consumers a dynamic and engaging way to shop while reshaping online retail trends.

Does Chinese Investment Benefit or Harm Ireland?

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Chinese investment in Ireland has grown significantly, with the number of Chinese companies operating in the country rising from 25 in 2020 to 40 in 2024. This surge has prompted debates about whether these investments offer opportunities for economic diversification or carry reputational and political risks.

For some, Chinese investment represents a chance for Ireland to reduce its dependence on U.S. tech giants like Apple and Alphabet, creating jobs and potentially making the Irish economy more resilient. Companies such as Huawei and WuXi Biologics have made substantial financial contributions, with Huawei alone generating €800 million annually through its operations in Ireland. Additionally, TikTok’s European headquarters is in Dublin, and Chinese retailer Temu relocated its global headquarters to Ireland in 2023.

However, critics argue that these investments come with strings attached. Chinese companies, including Shein, Huawei, and WuXi, have been linked to human rights abuses, labor issues, and national security concerns. Shein, for instance, has faced allegations of child labor in its supply chain, while Huawei and WuXi have been sanctioned by the U.S. over security concerns. Critics like Irish MEP Barry Andrews have voiced concerns about Chinese companies’ practices, calling for stricter scrutiny and pointing out that human rights violations should not be overlooked.

Another concern is Ireland’s relationship with the U.S. Many of the Chinese firms setting up in Ireland, such as Huawei, are companies that have been sanctioned by the U.S., which could create diplomatic friction. Ireland, while aiming to de-risk rather than decouple from Chinese investments, must balance its close ties to both China and the U.S.

Economists are also divided on the benefits of Chinese investment. While the Irish government promotes its pro-business environment, some argue that Ireland’s economy is already heavily reliant on foreign direct investment (FDI). With unemployment at 4.3%, close to full employment, there is debate over whether Ireland needs additional jobs from Chinese firms. Dan O’Brien, chief economist at Ireland’s Institute of International and European Affairs, suggests that Ireland’s FDI dependence is too high, making the country vulnerable to global economic shifts, particularly if deglobalization trends continue.

Other experts, like Constantin Gurdgiev, emphasize that China’s investments offer Ireland a strategic cushion against potential U.S. pullbacks, especially given the pressure on American companies to re-invest domestically. Gurdgiev also points out that Ireland could act as a neutral ground where U.S. and Chinese firms can operate, giving Dublin a geopolitical edge.

Ireland’s relationship with China is further complicated by its low corporation tax, which has historically attracted foreign investment. However, international pressures have led Ireland to raise its tax rate for large companies. In light of corporate tax reforms and competition from other European nations, China’s investments could serve as a counterbalance if U.S. firms begin to relocate.

Nevertheless, Ireland risks playing a “dangerous geopolitical game” by courting Chinese companies while maintaining its diplomatic closeness with the U.S. While the Irish government insists that Chinese investment is part of a broader strategy to keep the economy competitive, the potential risks—both in terms of human rights and national security—cannot be ignored.