Shein to set up huge Vietnam warehouse in U.S. tariff hedge, Reuters reports

Shein’s Bold Move: Vietnam Warehouse to Dodge U.S. Tariffs
Fast-Fashion Giant Shifts Strategy Amid U.S.-China Trade Tensions
In a strategic pivot to shield itself from the volatile U.S.-China trade war, fast-fashion behemoth Shein is making waves by leasing a massive warehouse in Vietnam, its first in the country. Announced on May 15, 2025, this move signals Shein’s proactive effort to diversify its supply chain and sidestep hefty U.S. tariffs that threaten its low-cost business model. As global trade dynamics shift, Shein’s latest play is a high-stakes bet to keep its $5 bike shorts and $18 sundresses affordable for American shoppers.
A Game-Changing Warehouse in Vietnam
Shein, known for its ultra-cheap, trend-driven clothing, has secured nearly 15 hectares—equivalent to about 26 football fields—of industrial land near Ho Chi Minh City, Vietnam’s bustling commercial hub. The warehouse, strategically positioned near an international airport and Vietnam’s largest ports for imports from China and exports to the U.S., will store apparel from contractors before it’s shipped overseas. This marks a significant step for Shein, which has historically relied almost entirely on China-based suppliers.
The decision comes as Shein navigates a turbulent trade landscape. The Trump administration’s May 2, 2025, decision to scrap the “de minimis” exemption—a rule allowing duty-free imports under $800—hit Shein hard, exposing its packages to a 120% tariff. A recent U.S.-China agreement softened these duties to 54% for parcels worth $800 or less and 30% for low-value commercial shipments, but the reprieve may be temporary. By establishing a foothold in Vietnam, where shipments under $800 still enjoy duty-free status, Shein aims to maintain its competitive edge.
Why Vietnam?
Vietnam’s appeal as a logistics hub is multifaceted, making it an ideal choice for Shein’s tariff-hedging strategy:

Trade Advantages: Vietnam’s shipments to the U.S. face lower tariffs than China’s, with duty-free treatment for packages under $800, though this could rise to 46% by July 2025 without a new U.S.-Vietnam agreement.
Strategic Location: Ho Chi Minh City’s proximity to major ports and an international airport streamlines imports from China and exports to the U.S., reducing transit times.
Manufacturing Growth: Vietnam’s established garment industry and competitive labor costs make it a viable alternative to China, with some Shein suppliers already setting up factories there.
Geopolitical Buffer: By diversifying away from China, Shein reduces its exposure to U.S. policies targeting Chinese goods, including accusations of illegal rerouting through Vietnam to dodge duties.

Analysts note that Shein’s move reflects a broader trend among global retailers rethinking supply chains amid geopolitical uncertainties. “Shein has little choice but to reduce its reliance on China,” said Sheng Lu, a fashion and apparel studies professor at the University of Delaware. “The instability of U.S.-China trade relations demands diversification.”
Challenges and Risks
While the Vietnam warehouse offers a lifeline, it’s not without hurdles. Shein’s business model thrives on rapid production and direct-to-consumer shipping from China, enabled by the now-defunct de minimis rule. Shifting operations to Vietnam could increase costs and slow turnaround times, potentially eroding Shein’s ability to churn out thousands of new styles weekly. Factory owners in China’s “Shein villages” in Guangzhou have already reported a 50% drop in orders as production shifts to Vietnam, highlighting the ripple effects on Chinese suppliers.
Moreover, the warehouse’s success hinges on Vietnam’s ability to comply with U.S. trade regulations. Washington has long criticized Vietnam for allowing Chinese goods to be rerouted to evade tariffs, prompting Hanoi to crack down on such practices. If Shein’s Vietnam operations are perceived as a loophole, they could face scrutiny. Additionally, the looming threat of the de minimis exemption vanishing entirely—potentially affecting all countries—adds uncertainty. “We’re advising clients to expect this exemption could be gone completely before long,” warned logistics expert Kapoor.
Shein’s Broader Diversification Efforts
The Vietnam warehouse is part of a larger strategy to globalize Shein’s supply chain. The retailer has explored sourcing from Turkey and Brazil and incentivized Chinese suppliers to open factories in Vietnam, offering up to 30% higher procurement prices and larger orders. These moves, however, have sparked debate. Shein has publicly denied shifting production capacity out of China, citing a growth in Chinese suppliers from 5,800 to 7,000 last year. Yet, reports of declining orders in China and increased activity in Vietnam suggest a quiet but significant pivot.
Shein’s efforts come as it prepares for a London stock market listing, with a reported valuation of $50 billion. The tariff-induced supply chain shake-up has forced the company to balance growth ambitions with cost management, all while maintaining the ultra-low prices that define its brand.
Impact on Consumers and Competitors
For American shoppers, Shein’s Vietnam move could mean stable prices in the short term, as the retailer avoids the full brunt of U.S. tariffs. However, if trade policies tighten further, price hikes may be inevitable. A Washington Post analysis found Shein’s women’s clothing prices rose 43% between late 2024 and April 2025 due to earlier tariff pressures, underscoring the stakes.
Competitors like Temu, another Chinese e-commerce giant, are also adapting, with both companies leveraging U.S. warehouses to bypass direct-from-China tariffs. Meanwhile, traditional retailers like Amazon, which launched its budget-friendly “Haul” brand, stand to benefit if de minimis rules are fully eliminated, leveling the playing field.
Conclusion: Shein’s High-Stakes Gamble
Shein’s decision to lease a massive Vietnam warehouse is a bold response to the unpredictable U.S.-China trade war, showcasing its agility in a cutthroat industry. By diversifying its supply chain, Shein aims to safeguard its low-cost model and keep affordable fashion accessible to millions. Yet, with trade policies in flux and logistical challenges looming, the fast-fashion giant is walking a tightrope. For Noyzy News readers, this is a story of adaptation and ambition, as Shein redefines global retail in the face of uncertainty. Stay tuned for the next chapter in this fast-fashion saga.