Bloomberg Exposé on Shein Reveals Clothing Contains Banned Forced-Labor Cotton, Underscores Urgency to Close a U.S. Loophole

Bloomberg News has published a hard-hitting investigative story this week that released findings of lab testing results that confirms certain clothing sold by e-commerce juggernaut Shein has been found to contain banned cotton produced with forced labor from the Xinjiang region of China.  Furthermore, the story details how Shein is utilizing a trade loophole called “de minimis” that is facilitating the entry of these banned products into the U.S. market with minimal scrutiny.

The Bloomberg feature story by reporter Sheridan Prasso titled, “Shein’s Cotton Tied to Chinese Region Accused of Forced Labor,” outlines how “laboratory testing conducted for Bloomberg News on two occasions this year found that garments shipped to the U.S. by Shein were made with cotton from China’s Xinjiang region.”

The exposé chronicles how cotton grown and harvested by Xinjiang forced labor continues to bleed into global textile and apparel supply chains and is further facilitated by a little-known trade loophole called the “Section 321 de minimis exception”. This exception, which is routinely utilized by Shein and certain other e-commerce companies, allows imports valued under $800 to come into the United States with minimal review and without paying duties, taxes, and fees.

Through this massive and rapidly growing loophole, approximately 2.7 million individual shipments falling below an $800 value enter the U.S. market each day, according to the latest data. In fact, the U.S. is on record pace for 1 billion de minimis shipments this year alone.

The explosion in e-commerce shipments using the Section 321 tariff waivers spawned new companies, like Shein, to create a multi-billion-dollar empire built on the foundation of a legal, but severely damaging tariff loophole.

We don’t know who is making these products, if they are safe, or if they use forced labor. In fact, unbelievably, these products get rewarded duty-free status. What’s the point of a free trade agreement with high labor and environmental standards, if there is a “click here” workaround that facilitates a race to the bottom?

According to the report, Agroisolab GmbH in Jülich, Germany, tested the garments using stable isotope analysis, “which measures variations in the isotopes of carbon, oxygen and hydrogen present in the cotton’s fibers to indicate the altitude and other climate characteristics of the region where it was grown.”

The lab compared Shein’s cotton fabric with fabric from Xinjiang that Bloomberg obtained from a U.S. apparel company with operations in China. A second test compared the Shein item with another sample the lab had previously obtained from Xinjiang, according to the Bloomberg report.

“We have to conclude it is a typical sample from Xinjiang, China,” Agroisolab’s CEO Markus Boner told Bloomberg.

The test results also ruled out “with more than 95% probability” several other cotton-growing regions, including India, Egypt, Australia, the U.S. and China’s Shandong province, according to the story.

Congress overwhelmingly supported and passed the Uyghur Forced Labor Prevention Act (UFLPA) banning products made of forced labor, including Xinjiang cotton. This law took effect in January 2021. Yet, this loophole in our tariff structure, has created an enormous workaround that is allowing these banned forced labor products to  make their way to our doorsteps and into our closets on a daily basis.

House Ways and Means Trade Subcommittee Chairman Earl Blumenauer (D-OR), who has authored and continues to push for key legislation to help close this loophole, has noted: “This loophole also makes it easier for people to import illegal goods and harmful products, because there is virtually no way to tell whether these packages contain products made through forced labor, intellectual property theft, or are otherwise dangerous.”

Until Congress and/or the administration acts to close the de minimis loophole, Chinese companies like Shein will continue to run a speeding train right through this loophole tunnel.

The National Council of Textile Organizations (NCTO) has been very active over the past several years working in a broad coalition to amplify the urgent need for the administration and Congress to use their authorities to close this enormous trade gap.

In congressional testimony before the House Ways and Means Trade Subcommittee last December, I outlined recommendations for Congress aimed at confronting unfair Chinese trade practices, including closing the de minimis loophole.

We must ensure this loophole is addressed immediately to combat the use of forced labor in China and in other areas of the world. Failure to address the de minimis loophole will continue an “open door” policy that invites China and others to ship duty free to the United States illegal and unsafe products that undermine American businesses and jobs, while also diluting any efforts to rein in its abhorrent human rights abuses.

What cannot be ignored is that these practices and this loophole continue to hurt domestic manufacturers, undermine our forced labor laws, and weaken our carefully negotiated free agreement trade structure.

This is why we need Congress and the administration to urgently act and make the policy changes we need to close this damaging loophole once and for all.

Valdese Weavers: Taking Sustainability to the Next Level

Valdese Weavers has been working with recycled yarns for nearly 20 years but in a bid to elevate its sustainability profile, the company turned to the SEAQUAL INITIATIVE based in Spain.

A leading fabric and textile producer that has been manufacturing residential and contract textiles for the furniture market in the foothills of North Carolina for more than 100 years, Valdese Weavers is widely considered to be an industry leader for designing and innovatively weaving beautiful decorative fabrics.

While the company takes pride in being a Made-in-USA manufacturer, one of its loftier goals has been to minimize its impact on the environment and the planet’s natural resources.

Valdese Weavers has used yarns recycled from plastic bottles for the past two decades to produce its environmentally-conscious products, especially in its contract division, but company officials began searching a few years ago for new ways to expand their sustainability efforts and achieve more innovative, sustainably-minded solutions to attack the existing problem of ocean pollution.

Fast forward to today and the journey has led Valdese to a dizzying array of new initiatives, including: a licensing arrangement with a Spanish non-profit organization named the SEAQUAL INITIATIVE; the launch of a new line of performance fabrics made from recycled ocean fabrics, InsideOut Performance Fabrics®; a collaboration with an award-winning artist; and a museum exhibit that opened on Friday (Nov. 4) at the Hickory Museum of Art in Hickory, N.C.

“We have been trying to find next steps of sustainability in terms of materials for several years,” says Christy Almond, vice president of product development and marketing at Valdese Weavers. “We have said ‘no’ to a lot of product material ideas that did not have an authentic story or durability, did not meet where we felt industry was headed, had inconsistent supply chains, or the price was out of line.”

In 2018, Valdese discovered the SEAQUAL INITIATIVE. After studying the non- profit organization’s mission, Almond says Valdese determined it could “take our recycling story to the next level.”

This organization founded on creating a collaborative community against pollution has brought together an extensive network of individuals, organizations, and companies “working together to help clean our oceans, raise awareness of the issue of marine litter and highlight those helping to fight it.”

“Their goal is to organize the individual organizations, cleanup committees and fishermen to bring their cleanup efforts together to incentivize them, clean up oceans, collect ocean trash, and use collective power to go to recycling agencies to process products and sort through it to use materials that can ultimately be upcycled,” Almond explains.

To view the entire process—from collection of ocean plastic waste to the production of the end product of Valdese Inside Out Performance fabrics, click here.

“When we met with SEAQUAL before COVID they were in 42 countries and now they are in 60 countries,” Almond says. “The amount of waste and upcycled materials has dramatically increased. We know they are making a difference.”

SEAQUAL has processed 600 tons of marine litter from the ocean. Of that total, the organization has transformed 200 tons of plastic into upcycled marine plastic and yarn for companies like Valdese to use.

“They actually embed the yarn with tracers, so that they know it is authentic. They are very serious about that process and they have certification at each of the steps in the supply chain that companies must adhere to,” Almond says. “As their network cleanup committees and processing grows, we are hoping that is going to continue to increase as more material becomes available.”

Hundreds of global brands and retailers are listed as licensing partners with SEAQUAL on its website, including such well-known retailers as American Eagle Outfitters, Bed Bath and Beyond, and Ikea.

“We had seen a lot of different ocean plastic stories out there. No one had this multi-faceted story about cleaning up the ocean, upcycling and properly disposing of the trash,” she said. “It’s one thing to sift through and take out the parts that you want, but you are not really making a difference.”

SEAQUAL, on the other hand, properly disposes of the ocean materials that are not recyclable.

“Taking on new yarn SKUs is an investment. To meet their 20 percent content, we had to invest in the right tools to get that content assured. In terms of raw materials, we felt like it was in line with our existing cost structure,” Almond notes.

Valdese Weaver’s goal is to expand development with SEAQUAL and bring awareness to the initiative and “challenge our industry to think about sustainable materials.”

“Just regular upcycled plastic is not enough,” Almond notes. “How do we move this journey forward? More needs to be done.”

One way to move the story forward is to partner with an award-winning artist and amplify the story to the public.

SEAQUAL and Valdese Featured in Museum Exhibit

That’s just what Valdese and SEAQUAL have done.

Valdese is collaborating with MacArthur Genius Award winning artist, Mel Chin, as part of an exhibit at the Hickory Museum of Art in Hickory, N.C. “to promote the power of design to fuel change in our industry.”

Chin, an ecologically and environmentally-minded artist, has been behind projects seeking to raise awareness on issues such as contaminated soil in New Orleans and abandoned homes in Detroit.

The Hickory Museum of Art has opened a new exhibit highlighting the problem of ocean pollution, in conjunction with an experiential exhibit, SEA to SEE, that has been created by Chin and is housed at the Mint Museum in Charlotte.

The Valdese exhibit at the Hickory Museum showcases the company’s partnership with the SEAQUAL INITIATIVE and explains how the company and the furniture industry is working together to help solve the problem of ocean pollution.

“We bring so many people through our facility to train them on the textile process, including salespeople with furniture manufacturers, furniture dealers, and large-scale retailers. These are big companies that are trying to help their sales team understand how to sell fabrics. I thought it would be great to connect our SEAQUAL story with what is happening at the museum and tell a bigger picture story about how the industry is using design to propel change,” Almond says.

“Textiles get a bad rap, not just in terms of manufacturing, especially if you’ve grown up in a textile town. You’ve seen and heard people lose jobs that go to China, or say that furniture is not a reliable career, or that furniture is not an innovative industry,” she adds.

“We wanted this exhibit to highlight technology and design and innovation and cool things happening in this community that are impacting not just Hickory but the United States.”

Barnet Hosts Congressman Greg Murphy (R-N.C.); Highlights the Importance of Supporting Policies that Bolster the Competitiveness of the U.S. Textile Industry

WASHINGTON, DC – Congressman Greg Murphy (R-N.C.) met with executives at William Barnet & Son LLC (Barnet) and toured a facility in Kinston, N.C. today, where the company’s innovation, advances in sustainable practices and its important contribution to the North Carolina economy were on full display.

Congressman Murphy’s visit is critical and comes at a pivotal time for the U.S. textile supply chain, which produced $65.2 billion in output in 2021 and employed nearly 535,000 workers. Barnet is part of the broader industry that is a major factor in high-tech and sustainable innovation in the production of everything from heart valves and stents to aircraft bodies and advanced body armor.

Barnet is a global manufacturing, recycling, and trading company, specializing in a wide range of fibers, polymers and yarns. Founded in Albany, N.Y. in 1898 by William Barnet, the company has been dedicated to a vision of being the world’s most respected, creative, versatile and sustainable solution provider to its customers and suppliers. The company currently employs over 400 employees worldwide.

During the discussion with Congressman Murphy, Barnet executives discussed several policy priorities that have far-reaching implications for North Carolina and the entire U.S. textile industry.

They also outlined the importance of policies aimed at bolstering onshoring and nearshoring production, closing a legal loophole in U.S. trade law that continues to undermine American manufacturing and gives China an advantage, and U.S. trade policy on China.

“We are honored to have hosted Dr. Murphy at our Kinston facility today,” said Chuck Hall, president of Barnet. “The opportunity to discuss important policies that impact not only our everyday business operations but the entire industry’s operations is invaluable. It is critical that U.S. trade policy centers around keeping the industry competitive. In particular, we discussed the need to maintain China 301 penalty tariffs, to fix a loophole in U.S. trade law known as the de minimis mechanism, which allows a package of goods valued at $800 or less per person to come into the country duty free every day and gives China backdoor access to the U.S. market, and to find a better process for renewing the Miscellaneous Tariff Bill (MTB) which allows U.S. manufacturers duty-free access to raw materials that are no longer produced within our borders. We look forward to continuing to the work with the congressman on policies that help drive onshoring and nearshoring to the U.S. and the Western Hemisphere and those that support strong government procurement and American-made products.”

“It was wonderful to meet with Barnet’s officials and tour their impressive textile facility today. North Carolina’s textile industry is a huge driver for our economy, directly employing nearly 40,000 workers and generating over $2.7 billion in textile-related exports,” said Rep. Greg Murphy, M.D. “I am grateful to the industry leaders who took the time to discuss how we can expand this great industry, grow our state’s economy, and protect domestic manufacturing.”


NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers.

  • U.S. employment in the textile supply chain was 534,000 in 2021.
  • The value of shipments for U.S. textiles and apparel was $65.2 billion in 2021.
  • U.S. exports of fiber, textiles and apparel were $28.4 billion in 2021.
  • Capital expenditures for textiles and apparel production totaled $1.85 billion in 2020, the last year for which data is available.

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Kristi Ellis

Vice President, Communications

National Council of Textile Organizations |  202.684.3091