Temu and SHEIN to raise prices in the US, cut advertising spending but boost sales as Trump tariffs lead to last-minute demand
Chinese e-commerce giants Temu and SHEIN have decided to raise prices in the United States due to changes in U.S. tariff rules. The U.S. had a 'de minimis rule' that exempts imports of less than $800 (about 114,000 yen) from tax, but at the direction of President Donald Trump, China and Hong Kong are now exempt.
Temu and Shein slash US ad spending as trade war hits
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Temu and SHEIN are platforms known for selling products at relatively low prices, and they take advantage of this low price to import products tax-free in various countries. However, the domestic market is being squeezed by Chinese e-commerce companies taking advantage of the de minimis rule to import large quantities of goods, and there is also the fact that large quantities of illegal drugs are slipping through customs. In the United States, there is a movement to view this as an 'abuse of the tax-free rule,' and revisions to the rules have been considered since the Joe Biden administration.
White House urges Congress to pass bill to improve tariff exemption rules abused by SHEIN and Temu - GIGAZINE
After taking office as president, Donald Trump, citing the fact that large quantities of opioid painkillers were being illegally imported hidden in packages originating from China, signed an executive order on April 2, 2025 to end duty-free treatment for packages imported from China and Hong Kong, and announced that the order would come into effect on May 2, 2025 local time.
This presidential decree completely abolished the tax exemption for products priced at less than $800, and instead, products ordered through the United States Postal Service were to be subject to a $25 or $50 tariff per item. However, as the situation escalated further, multiple presidential decrees were signed, and a flat rate of $200 tariffs will be imposed from June 2025.
Products shipped from China through other carriers, such as UPS, are subject to customs duties of up to 145% of the product's value, although this percentage is subject to change and is currently expected to reach245% .
These measures will deal a major blow to Temu and SHEIN, which are taking advantage of the tax-free system to distribute their products at low prices. In response to the change in tariff regulations, both companies have announced that they will raise the prices of their products in the United States.
SHEIN released a statement saying, 'Due to recent changes in global trade rules and tariffs, our operating costs have increased. In order to continue to provide the products you love without compromising on quality, we will adjust our prices starting April 25, 2025.' Temu said, 'We are stockpiling inventory and preparing to ensure smooth delivery of orders during this period,' and also
Additionally, both companies have been seen reducing their marketing spend: According to market research firm Sensor Tower, Temu cut its ad spending on Meta, X, YouTube and others by an average of 31% month-on-month in the two weeks ending April 13, while SHEIN cut its spending by 19% month-on-month in the first two weeks of April.
The popularity of apps has also declined, with Temu, which had always been in the top 10 of the US free app rankings, dropping to 58th place, and SHEIN, which was 15th in March, dropping to 42nd. In addition, shares of China's PDD Holdings, the operator of Temu, plummeted 22% in April. Shein is a privately held company.
Temu dropped from 3rd to 58th in App Store rankings as soon as it completely stopped serving Google Shopping ads - GIGAZINE
However, sales have recovered, likely due to a rush to buy before the tariffs were imposed, and Bloomberg reports that SHEIN's sales were up 29% year over year in March and 38% in the first 11 days of April, accelerating the trend, while Temu's sales grew 46% and 60%, respectively, over the same period.
Temu significantly increased its spending in the US in 2024, even rising to become the top advertiser on X. SHEIN is also investing the same amount of money as Temu in advertising, but the two companies still account for less than 1% of the US e-commerce market.
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