Chinese e-commerce giants Shein and Temu have seen a sharp decline in their rapid US growth, reports the Financial Times, following President Donald Trump’s imposition of high tariffs on Chinese goods and the elimination of a tax exemption that allowed them to undercut competitors.
According to Sensor Tower, Temu’s monthly active US users plummeted by half between March and June, dropping to 40.2 million. Shein’s US user base also declined by 12% in the same period, reaching 41.4 million.
Shein and Temu revolutionized e-commerce, transforming the retail sector in the West over the past five years. By shipping individual packages directly from China, they bypassed import duties, offering low prices backed by massive social media ad campaigns to build a vast customer base.
Shein’s attempt to capitalize on its growth through a stock market listing has stalled, failing to gain regulatory approval in the US or UK. Reuters reported last week that Shein plans to apply for a Hong Kong listing soon.
In May, Trump eliminated a US exemption allowing duty-free entry for packages under $800, replacing it with a 90% tariff, later reduced to 30%. In response, Temu shifted its US model, fulfilling orders through US-based sellers instead of Chinese factories.
The decline in Temu and Shein’s US usage may also stem from reduced advertising budgets. Sensor Tower data shows Temu’s US ad spending dropped 87% year-over-year in the last three months, with Shein’s falling 69%. Both companies are now focusing on Europe, where Temu’s user base surged 76% in France, 71% in Spain, and 64% in Germany in June.
However, European growth could face challenges as the EU plans a €2 fee on small packages, and the UK considers scrapping its own import duty exemption.