00:01The days of cheap Chinese goods by post are coming to an end for U.S. shoppers.
00:06Xi'an and Timu have warned they're going to raise prices from April 25th.
00:11In near-identical letters to customers this week, they urged people to buy now at today's rates.
00:17The online giants had grown big in large part thanks to the so-called de minimis rule,
00:22which allowed them to ship low-cost goods to the U.S. free of all duties.
00:27That loophole will now close from early May under an executive order signed by Donald Trump.
00:33While that spells higher costs for U.S. shoppers,
00:36it also means pain for the army of Chinese firms that supplies Xi'an and Timu.
00:41Reuters reporter Casey Hall visited some of those companies on a trip to Guangzhou in southern China.
00:48We visited a number of these so-called Xi'an villages,
00:51which are home to thousands of suppliers for the ultra-fast fashion retailer.
00:56The mood there was pretty glum because a lot of the suppliers there have seen their orders cut.
01:01Some told us that their orders have been cut by up to half this year.
01:05Besides cancelling the de minimis rule, Trump has also ramped up tariffs on Chinese goods to 145%.
01:12Xi'an could potentially dodge these duties by shifting more of its output to Vietnam,
01:17which faces lower U.S. duties for now.
01:20In Guangzhou, some factory bosses said Xi'an is doing exactly that,
01:25though it's a move the company denied in a statement to Reuters.
01:29And even if production does move, it may be no quick fix,
01:33as Xi'an's business model isn't just about rock-bottom production costs.
01:37It's also about ultra-fast reaction to consumer tastes.
01:41A little-known fact about Xi'an's success is that it's built on this amazing Chinese supply chain.
01:46So they have, they told us, 7,000 suppliers in China.
01:50Many of them are small, nimble, agile factories that can produce thousands of styles every week
01:56in small quantities and quickly scale them up if they become popular.
01:59The problem for Xi'an is if they move their supply chain to Vietnam,
02:03it is not as well established, it's not as efficient as the supply chain in China.
02:07That means that it will take them longer and possibly be more expensive for them to produce there,
02:12which for them in an industry which is so reliant on being fast and on being cheap is a big problem.
02:19Dresses are currently priced at between $6 and $91 on the Xi'an website.
02:24They start at an even lower price on Timu.
02:27Now the question is, just how much of an increase US shoppers will be willing to tolerate?
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