Fast-fashion e-tail giant Shein’s planned £50 billion float on the London Stock Exchange has another obstacle to overcome, this time in the shape Donald Trump and European regulators. The US President wants to close a tax loophole central to the fashion giant’s business model.

Trump has promised to scrap the ‘de minimis’ exemption for small packages worth less than $800 (£645) that are shipped from China, Canada and Mexico to the US. The rules mean small packages mailed directly to US home addresses currently avoid import taxes.

The loophole has allowed retailers including Shein to avoid paying customs duties by shipping small orders directly to customers. Estimates compiled by the US select committee on the Chinese Communist Party last year suggested that Shein and fellow Chinese online store Temu were responsible for almost 600,000 packages shipped to the US every day that were under the $800 threshold.

It raises the prospect of much higher duty costs for Shein, given the vast majority of its US sales are shipped in small packages. So the impending tax changes cast doubt over whether the Chinese company can push ahead with its London IPO.

Clive Black, of Shore Capital, told Sky News: “Depending on where they are in the process, it could be distinctly unhelpful … I would think that every Chinese company trading with America at the moment is thinking that they need to understand the lay of the land here.”

Shein made $8.5 billion in revenues from the US in 2023, according to GlobalData, equal to around 28% of its global revenues. GlobalData spokesman Neil Saunders said the removal of the de minimis benefit was “potentially very disruptive”, adding that it had “the potential to dampen investor sentiment”.

Although the full scope of the changes is yet to be made clear and Shein has been diversifying where it ships from, the fashion giant could be facing hundreds of millions of dollars in additional import duties. H&M, for example, paid $205 million in import fees in 2022, government figures showed.

Wayne Brown, of Panmure Liberum, told Sky the US clampdown suggested similar moves could be coming in other markets. He said: “It raises the prospect that the EU will do the same and that the UK and other countries may follow.” There has been heavy criticism of the tax loophole from local European and UK businesses.

Shein’s planned listing in London would mark one of the biggest deals this year and is thought to be supported by the government. However, doubts have already been mounting about the listing as the company faces scrutiny over alleged abuses in its supply chain.

Earlier this week, campaigners at Stop Uyghur Genocide launched a judicial review process to block the Chinese fast fashion empire’s planned float. The group has pointed to alleged evidence to indicate that Shein has benefitted from forced labour. The claims have been denied by the Chinese company, which has said it “strictly prohibits forced labour in its supply chain globally”.