Temu and Shein Struggle in the U.S. Amid Trump Tariffs and De Minimis Loophole Closure
U.S. demand for products from Shein and Temu declines following the closure of 'de minimis' trade loophole.
The flashy, affordable e-commerce giants Temu and Shein have taken a hit in the United States, struggling against President Donnie Two-Scoops' tariffs on Chinese imports and the closure of the de minimis loophole. Fresh data shines a light on the turmoil.
Temu's daily active users (DAUs) plummeted 52% in May compared to March, before the tariff announcements. Shein's DAUs slid 25% during the same time period. Monthly active users (MAUs) also saw a drop, with Temu down 30% and Shein 12%.
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Such declines were mirrored in both platforms' rankings on the Apple App Store. Temu's average ranking slipped from a high of top 3 a year ago to 132 in May 2025. Shein's ranking plunged from a top 10 position the year prior to an average of 60 last month.
Neither Temu nor Shein commented on CNBC's request for comment.
The stumble comes as both companies have scaled back on U.S. advertising spending, a response to the tariff announcements from Trumpville.
In April, Trump made his stance clear with sweeping tariffs on Chinese imports, including the killing off of the "de minimis" tariff exception on May 2, which used to allow companies to ship goods of $800 or less to the U.S. duty-free.
Raising Prices Post-Tariffs
In May, Temu's U.S. ad spend dropped a staggering 95% year-on-year, while Shein's plummeted 70%.
"Temu and Shein's decline in U.S. ad spend was also noticeable in April, as spend decreased by 40% and 65% YoY, respectively," Seema Shah, vice president of research and insights at Sensor Tower, said in emailed comments to CNBC.
In the face of these tariffs, both firms adjusted their logistics models. Temu opted for building U.S. warehouses, departing from the drop shipping model that allowed items to be shipped directly from Chinese suppliers to U.S. consumers.
Rui Ma, founder and analyst at Tech Buzz China, believes these moves will affect more than just ad spend strategies and user acquisition tactics.
"All these additional costs and red tape are clearly denting Chinese platforms' prospects in the U.S. market," she wrote in emailed comments.
Tech Buzz China research from March showed that Temu would start to feel the pinch of taxes when they reached 50%. The tariff on former de minimis imports currently stands at 54%, a drop from 120% during a 90-day tariff truce between the U.S. and China.
Global Growth Galore
Temu's parent company PDD Holdings posted first-quarter earnings earlier this month, falling short of estimates and citing tariffs as a major pressure on sellers.
Despite the setbacks in the U.S., Temu's popularity has grown outside American borders. In the second quarter, non-U.S. users accounted for a whopping 90% of the platform's 405 million global MAUs, according to HSBC.
HSBC analysts point to growth in Europe, Latin America, and South America as reasons behind this uptick, with swifter growth occurring in less affluent markets.
"Many (Chinese platforms) are now actively redirecting their efforts toward other markets such as Europe," Ma said.
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Sources:1. CNBC2. SCMP3. Bloomberg
- With plummeting daily active users (DAUs) and monthly active users (MAUs) in the United States, the tariffs on Chinese imports and closure of the de minimis loophole have significantly impacted the finance and business sectors of both Temu and Shein, two prominent e-commerce platforms.
- Amid the declines in their U.S. ad spend and the adjustment of logistics models to cope with the increased costs brought by tariffs, these e-commerce giants have shifted their focus towards global markets, such as Europe, where they have experienced marked growth, despite the setbacks in the U.S. These developments highlight the far-reaching impact of trade policies on the global economy, markets, and technology sectors.
