Trump China plans a positive for Europe discount retailers

TRUMP CHINA PLANS A POSITIVE FOR EUROPE DISCOUNT RETAILERS

Last week, U.S. President Trump proposed a removal of the duty-free treatment of low-cost packages from abroad, which analysts at RBC believe could have a positive knock-on impact on some European retailers.

Later Trump temporarily paused the de minimis exemption, which allows waiver of standard customs procedures and tariffs on items worth less than $800 that are shipped to individuals from foreign countries, due to packages piling up at U.S. customs.

If restarted, RBC believes the de minimis exemption provides a threat to the business models of low-cost China retailers Shein and Temu, which could benefit Europe's other fashion e-commerce and value retailers.

"We expect the likes of Shein and Temu will look to pass added duty charges on to consumers, in the form of higher prices," says RBC.

"We view this as an opportunity for peers in the space, given a potential narrowing of the price gap with Shein/Temu."

They believe that online fashion retailer Zalando ZAL could stand to benefit, having recently bought young fashion chain About You.

RBC also thinks value retailers, such as B&M BME, Action (owned by 3I Group III) and AB Foods' ABF Primark, should also get a lift.

(Samuel Indyk)

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