Chinese online shopping giants Temu and Shein are preparing for dramatic shifts in their U.S. business models. Beginning April 25, all imported packages, no matter what they’re worth, will be subject to new U.S. tariffs. That ends the “de minimis” exemption, which once let products valued at less than $800 in duty-free.
Massive Tariff Increases Shake Up Online Shopping
Under the new regulation, firms such as Temu and Shein may be hit with tariffs of up to 145% on products imported into the U.S. The action comes after former President Donald Trump’s renewed efforts to impose tighter trade policies on China. Although the tariffs are intended to shield American producers, their ripple effect is already being experienced throughout global e-commerce.
Ad Spending Slashed as Tariffs Bite
As a countermeasure, Shein and Temu have also started scaling back their pushy online ads. SensorTower data cited by Reuters indicate that Temu’s daily U.S. ad expenditure on platforms such as Facebook, Instagram, TikTok, Snap, X, and YouTube decreased 31% in the initial two weeks of April. Shein then had a 19% decline on equivalent platforms.
These advertising clips are foreshadowing a broader slowdown. With rising costs, these firms are pulling in their belts and gearing up for potentially tougher times ahead.
Consumers Forewarned of Future Price Increase
Both Shein and Temu have begun warning U.S. customers to prepare for increased prices. “Because of recent shifts in global trade policies and tariffs, our operating costs have increased,” Shein stated in a customer message. The company warned price hikes would start on April 25.
Temu is also likely to follow suit, since the new tariff regime will substantially raise their cost base. This marks the end of ultra-low prices that enabled both platforms to establish a presence in the U.S. market.
Temu and Shein’s Global Model Under Pressure
Temu, a subsidiary of China’s PDD Holdings (PDD.US), is dependent on cross-border shipping of cheap Chinese goods. Likewise, Singapore-based Shein sources the majority of its fast fashion items from Chinese manufacturers. Both firms established their U.S. empires by taking advantage of the de minimis loophole to circumvent tariffs and maintain prices at rock-bottom levels.
The new trade regulation not only seals that loophole but it writes the playbook over. Cheap, high-volume shipping from China to individual consumers is now a far more costly model.
Policy Shift Could Reshape Online Retail
For American consumers, this could be the beginning of a discernible change. Prices on household items, from clothing to home decor, will likely increase. For American retailers, this policy might balance the field. American-based e-commerce firms who have complained for years of unfair competition can now gain an advantage.
But my guess is that for many of these U.S. consumers who have become accustomed to cheap, fast shipping from China, the transition will be difficult to ignore.
A Sign of Escalating Trade Tensions
Temu tariffs shift is just one of a growing number of recent actions indicating intensifying trade tensions between China and the U.S. It’s a change that could affect not only consumers and e-commerce sites but global supply chains as well.
Temu and Shein’s response are the first signs of what is to follow. With advertising eliminated and prices increasing, the future of Chinese-dominated e-commerce in the U.S. is moving into a new, less predictable era.
For now, this is certain: the era of duty-free online purchases from China is finished.
Conclusion
All in all, the new Temu tariffs rules is hitting the E-commerce businesses of China. It will be interesting to see what future has for the businesses in the USA
