What Gallagher Left Undone: Temu Still Sends You A Slave-Sewn Dress For Just $15—Tax-Free

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When the Wisconsin Republican congressman who chairs the Select Committee on the Chinese Communist Party, announced March 22 his retirement from Congress effective April 19—after the April 2 primary—instead of at the end of this congressional session, he did more than ensure Republicans could not replace him before January. 

He left unfinished his work exposing the Chinese e-retailers Temu and Shein – work that started with a flourish.

“These results are shocking: Temu is doing next to nothing to keep its supply chains free from slave labor,” said Rep. Michael J. Gallagher in his remarks at the June 23 release of the committee’s report: “Fast Fashion and the Uyghur Genocide: Interim Findings.”

If headquarters matter, in the 10 months since the report, Temu has made itself a moving target. 

Atlanta First News investigated Temu, and its reporter found that nobody had ever heard of Temu at its purported Boston address. However, its parent company, PDD Holdings, moved its headquarters from a townhouse in Delaware to Dublin. 

The Green Bay, Wisconsin, native said the Chinese e-retailers built their businesses on a loophole.

“At the same time, Temu and Shein are building empires around the de minimis loophole in our import rules—dodging import taxes and evading scrutiny on the millions of goods they sell to Americans,” the Marine captain veteran of Iraq said. “We need to take a hard look at this loophole that is being abused to tilt the playing field against American companies.”

That tax loophole, the so-called “de minimus” rule, was first enacted in 1938 to allow Americans traveling abroad to mail home knick-knacks and souvenirs outside the regular tariffs on imports. 

In 2015, Congress raised the tax-free limit from $200 to $800, which did not seem consequential at the time. However, when the COVID-19 pandemic fueled the online shopping boom, suddenly, that $800 limit was child’s play for Temu and Shien, where some dresses cost less than $15.

The report found: 

Key Finding 1: Temu and Shein alone are likely responsible for more than 30 percent of all packages shipped to the United States daily under the de minimis provision and likely nearly half of all de minimis shipments to the U.S. from China.

Now, there are more than 685 million packages shipped every year, tax-free, because the import tax loophole exempts packages addressed to a residence.

When Temu’s parent, PPD Holdings, filed its 4th Quarter financial report on March 21, the company reported $12.5 billion in profits.

ChiCom Committee report: Temu’s tax exemption clears it, no to report slave labor

Gallagher’s committee connected the dots between the use of slave labor and the de minimus import tax loophole: 

Key Finding 2: Temu’s business model, which relies on the de minimis provision, is to avoid bearing responsibility for compliance with the UFLPA and other prohibitions on forced labor while relying on tens of thousands of Chinese suppliers to ship goods direct to U.S. consumers.

The Uyghur Forced Labor Prevention Act directs the Homeland Security Department’s Forced Labor Enforcement Task Force to maintain a list of entities in violation. The last entity put on the list was the Xinjiang Zhongtai Group Co. Ltd in September. 

The committee found that Temu blew off the reporting requirements spelled out in the law made to sanction entities that exploit the Uyghurs: 

Key Finding 3: Temu conducts no audits and reports no compliance system to affirmatively examine and ensure compliance with the UFLPA. The only measure Temu reported that it takes to ensure that it is not shipping goods to Americans that are produced with forced labor in violation of U.S. law was that its suppliers agree to boilerplate terms and conditions that prohibit the use of forced labor.

Investigators for the committee also found that Temu did not respect the restrictions on commerce in the Uyghur regions: 

Key Finding 4: Temu admitted that it “does not expressly prohibit third-party sellers from selling products based on their origin in the Xinjiang Autonomous Region.”

Temu vacuums up data from users for themselves, ChiComs

Like all other Chinese businesses, Temu and Shein share all the data they collect from American customers with their government and the Chinese Communist Party.

In addition to the Atlanta outlet’s report, Boston’s Fox Ch. 25 conducted its own report on Temu, and they even walked into the Boston building looking for the Temu offices that were not there.

The Boston channel was reporting on the lawsuit filed by the local law firm Hagens Berman. The class-action lawsuit was filed Nov. 3 in Chicago federal court on behalf of more than 12 plaintiffs in at least five states and was amended Feb. 16. 

For a long time, I have been obsessed with how the ChiComs exploit our open society and good nature to vacuum up as much of our data as they can.

Once, in May 2010, at Fort Bragg, North Carolina, during my tour with XVIII Airborne Corps public affairs, I chatted with a Special Forces master sergeant, who told me that one-third of all Facebook profiles were compromised by an exact layer of the actual profile page, but ChiCom spyware lived in the space between the actual profile page and the mock page.

The master sergeant also explained to me that virtually all USB devices were made in China and that all of them had spyware, even those digital frames that ran a collection of photos, one after the other. 

It’s been more than a dozen years since the master sergeant gave me the heads-up about how the Chinese take advantage of Americans’ need for consumer goods.

When I look back at the fanfare that heralded the committee’s start, Gallagher’s trip to Taiwan, the arrest of Chinese nationals in New York running a ChiCom police station, and the rush of hearings, I expected so much more. 

Now, I see that Gallagher is out the door, and Temu is still avoiding import tariffs, using slave labor, and swiping data. 

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