France began imposing taxes on the most extreme segment of the fast fashion industry on Tuesday, in an attempt to restrict a surge in cheap clothing sold by electronic commerce sites including Shein and Temu.
The new levies vary from 25 euro cents, or 30 US cents, for a pair of underwear or socks, up to 12 euros, or 14 dollars, for a coat. The charge is capped at 50 percent of the product's selling price before taxes.
The taxes are part of a fast fashion law approved in June. The legislation aims to address environmental concerns resulting from the overproduction of garments.
Shein and Temu are major online retailers that were founded in China. Both companies have rapidly gained global market share by shipping extremely low cost goods directly to consumers. Fast fashion refers to the rapid and mass production of clothing designed to replicate current trends at a low cost.
Consumer purchasing power
French Trade Minister Serge Papin told the local Ouest France newspaper that the platforms were fake defenders of consumer purchasing power. He stated that they sold items at low prices, but their products frequently failed to meet standards and lacked durability.
The French law calculates the charges using a formula that considers the number of products available under a brand, their prices, and their reparability.
France is the first country in the European Union to penalise retailers based on the number of items they offer on their websites. The European Union is a political and economic union of 27 member states located primarily in Europe.
According to its prospectus, Shein's product selection included more than two million items as of March 31 this year. The company adds 4,700 new apparel styles every day.
Neither Shein nor Temu responded to requests for comment regarding the taxes.
Trade barrier claims
Quentin Ruffat, a spokesperson for Shein in France, had previously stated that the fast fashion taxes would harm customers by increasing prices.
The Chinese Commerce Ministry described the French law as discriminatory and a trade barrier. The ministry stated that the legislation might violate the principles of the World Trade Organisation.
The World Trade Organisation is an intergovernmental organisation that regulates and facilitates international trade between nations. It establishes the rules of trade and provides a forum for resolving disputes.
The taxes compound existing difficulties for Shein. The end of duty free access for low cost electronic commerce parcels in the European Union and the United States caused the company's valuation to plummet ahead of its debut on the Hong Kong stock exchange on Tuesday.
European retailers
Authorities indicated on Monday that European retailers offering a smaller range of products on their websites are not expected to be affected by the measures.
This exemption includes Zara, which is owned by the Inditex group, as well as H&M. Both Zara and H&M are established high street fashion chains that operate thousands of physical stores globally alongside their online operations. Inditex is a multinational clothing company headquartered in Spain and is one of the largest fashion retailers in the world.
The French association Refashion will be responsible for collecting the new taxes in the country. The group will also determine who is responsible for the payments.
Under a European Union directive concerning Extended Producer Responsibility for textiles, all member states must introduce taxes by April 17, 2028.
Recycling discarded clothing
These European taxes will be collected from producers by an association. The funds are designated to finance the sorting, waste treatment, and recycling of discarded clothing.
Extended Producer Responsibility is an environmental policy approach in which a producer's responsibility for a product is extended to the post consumer stage of the product's life cycle.
Other member states have already created Extended Producer Responsibility associations for the textile sector.
In the Netherlands, an organisation called Stichting UPV Textiel manages these responsibilities. However, the Dutch association will charge retailers based on the volume of clothes sold in the country, rather than the variety of products offered, according to information on its website.
The French taxes are expected to increase further starting in 2030.
