Forever 21 may become just a memory after the legendary fast fashion chain filed for bankruptcy for the second time within six years. Forever 21 will soon close all 350 U.S. stores and liquidate.
According to NBC News, the formerly unstoppable brand experienced a steep decline after its 2015 peak, when its sales topped $4 billion. Its heavy reliance on brick-and-mortar stores and the impact of inflation placed it at a disadvantage against internet-based competitors like Shein and Temu.
But, a critically important in the fast fashion war was the de minimis tariff exemption.
Competitors Shein and Temu ship dirt-cheap garments directly to U.S. shoppers from factories in Asia. The already low-cost goods are dramatically cheaper thanks to the de minimis exemption that waives tariffs for overseas packages worth less than $800.
With Shein, for example, a chiffon blouse might regularly sell for $10 and, on sale, it could arrive in the hands of an American teenager for $5. Forever 21 might sell a similar blouse for $20, or $15 on sale.
A retailer like Forever 21 couldn't use the exemption because it buys large quantities, ships garments to warehouses, and then distributes to stores. Without the exemption, Forever 21 might have been able to compete on price somewhat.
In February 2025, the Trump administration eliminated the de minimis exemption, but this caused a million packages to stack up at JFK Airport. Customs officials didn't have the staff to sort through the packages, all of which suddenly owed a tax. So the exemption's demise has been paused pending resolution of logistical issues.
In 2024, over 1.36 billion shipments entered the U.S. under this exemption, with Shein and Temu leveraging it heavily for fast fashion. About 70 percent of textile and apparel imports come via this route. A decade ago, just 140 million shipments arrived with the exemption. Today, these direct-to-customer shipments have shifted the retail landscape, particularly for price-sensitive sectors like fast fashion.
