Forever 21’s struggles are linked to a loophole in US customs rules that allows non-US retailers to sell at lower prices, impacting the company’s core customer base. The “de minimis” exemption, raised from $300 to $800 in 2016, has led to an increase in online shopping and nearly 1.4 billion packages entering the US last year.
This change, described as a “paradigm shift,” has shifted retail dynamics, with companies like Shein and Temu benefiting from the loophole. However, Forever 21’s decline is attributed not only to this policy but also poor merchandising and lack of brand clarity. The company filed for Chapter 11 bankruptcy protection after its US stores are expected to close.
The administration aims to “level the playing field” by ending the exemption, while the Commerce Department temporarily suspended it due to processing concerns. Analysts see the loophole’s impact on Forever 21’s demise as significant but not the sole cause of its struggles.
Source: https://www.axios.com/2025/03/17/forever-21-bankruptcy-shines-light-on-de-minimis-impact