U.S. Tariff Policies Impact SHEIN and Temu Severely: Rising Prices, Supply Chain Restructuring, and Drop in App Rankings

Taiwan • Business • 05/02 09:03
U.S. Tariff Policies Impact SHEIN and Temu Severely: Rising Prices, Supply Chain Restructuring, and Drop in App Rankings

Starting May 2, 2025, the United States will remove the tax exemption for small parcels valued under $800 from China and impose an import tax of up to 120% or a fixed tax of $100 per package, having a significant impact on Chinese cross-border e-commerce platforms SHEIN and Temu. The prices of goods on both platforms have risen by 40% to 100%, leading Temu to shift to a local warehouse model and nearly eliminate direct shipments from China. A reduction in advertising has caused a drop in app store rankings. This policy change is forcing consumers to switch to local platforms, altering their shopping habits.

Key Updates

05/03 03:30

Pepsi Faces Tariff Challenges: Rising Costs of Concentrate and Aluminum Imported from Ireland, Coca-Cola is Less Affected

In April 2025, President Donald Trump implemented a new tariff policy, placing supply chain and cost pressures on PepsiCo. PepsiCo's soda concentrate imported from Ireland is subject to a 10% tariff, and the tariff on aluminum has been increased to 25%, leading to increased operating costs for PepsiCo in the U.S. market. In contrast, Coca-Cola is less affected because of its reliance on a domestic supply chain. This tariff policy heightens the competition between these two major brands and underscores the fragility of the global supply chain.

05/03 02:00

The American Footwear Association warns Trump about the threat of tariffs, as 76 brands, including Nike, request exemptions to avoid inventory shortages and price increases.

On April 29, 2025, the Footwear Distributors and Retailers of America (FDRA), representing 76 brands including Nike and Adidas, sent a letter to former President Trump requesting an exemption from the high import tariffs on countries including China, Vietnam, and Cambodia, with tariff rates ranging from 145% to 220%. The FDRA warned that these tariffs would threaten the survival of the footwear industry, resulting in business closures, inventory shortages, and price hikes, and would not help bring manufacturing back to the United States.

05/02 19:32

Apple, Samsung, and Microsoft adjust supply chain and pricing strategies in response to U.S. tariffs and global inflation pressures.

Apple, Samsung, and Microsoft are adjusting their supply chains and pricing strategies in response to U.S. tariffs and global inflation pressures. Apple is moving the production of iPhones for the U.S. market to India, shifting the production of iPads and other products to Vietnam, and sourcing chips from TSMC's U.S. facilities. Samsung is considering increasing product prices in the U.S. market due to tariff impacts. Microsoft has already raised the global prices of Xbox consoles and accessories to account for rising development costs.

05/02 18:31

The White House says tariffs will not increase car prices, while automakers such as GM and Ford have expressed concerns.

The White House emphasized that the new tariff policy from the Trump administration won't increase car prices, but car manufacturers such as General Motors, Ford, Honda, and Toyota have voiced concerns over increasing costs and are adjusting their financial forecasts and production strategies to tackle potential impacts. Even though the White House is offering compensation and exemption measures, automakers still struggle to guarantee stable future prices. Estimates suggest that tariffs could raise the cost of each vehicle by $2,000 to $12,000, impacting market confidence and consumer behavior.

05/02 15:30

American Companies Face Tariff Strain: Apple's Costs Skyrocket, McDonald's Sales Decline, The Business Community Urges Policy Changes

The United States has imposed high tariffs on China and other trading partners, resulting in cost pressures for businesses and sluggish consumer demand. Apple estimates an increase of $900 million in costs next quarter due to the tariffs, while McDonald's same-store sales have dropped 3.6% for two straight quarters. The business community is urging the creation of a tariff exemption mechanism to prevent economic harm, with more than 180 companies having submitted exemption requests. The Trump administration's exemption process is lacking in transparency, and the business sector is demanding clearer policy responses.

05/02 09:03

U.S. Tariff Policies Impact SHEIN and Temu Severely: Rising Prices, Supply Chain Restructuring, and Drop in App Rankings

Starting May 2, 2025, the United States will remove the tax exemption for small parcels valued under $800 from China and impose an import tax of up to 120% or a fixed tax of $100 per package, having a significant impact on Chinese cross-border e-commerce platforms SHEIN and Temu. The prices of goods on both platforms have risen by 40% to 100%, leading Temu to shift to a local warehouse model and nearly eliminate direct shipments from China. A reduction in advertising has caused a drop in app store rankings. This policy change is forcing consumers to switch to local platforms, altering their shopping habits.

05/02 05:02

Yiwu businesses are turning to South American and Middle Eastern markets: The US-China trade war has severely damaged the US toy supply chain

Amid the US-China trade war and tariff pressures, exporters in Yiwu in Zhejiang, China, have shifted their focus away from the US towards South American and Middle Eastern markets, which has impacted the US toy supply chain. Exports from Yiwu to the US have significantly decreased, and merchants such as Hu Tianqiang and Lin Xiupeng have adjusted their strategies. The US toy industry faces supply disruptions and rising costs as companies like Hasbro and Spin Master seek to diversify their supply chains, though challenges persist.

05/02 05:02

From China, the US has ended the tariff exemption for low-value parcels, though challenges in implementation remain.

On May 2, 2025, the United States terminated the tariff exemption for low-value import packages from China and Hong Kong, ending the "de minimis" system. This policy change occurred due to accusations by the Trump administration against China's trade practices and drug smuggling, affecting e-commerce platforms such as Shein and Temu. Even though the policy has taken effect, the U.S. Customs and Border Protection is facing challenges in implementation, including complex customs procedures and inadequate logistics handling capacity, revealing systemic bottlenecks.

05/02 04:31

Trump Closes Tax Loophole for Chinese Goods: Online Shopping Costs Increase for American Consumers

Former President of the United States, Donald Trump, ended the de minimis tax exemption rule applicable to China and Hong Kong at the end of April 2025. The rule allowed low-cost goods to enter the U.S. market tax-free. This move was intended to protect American manufacturing and small businesses. However, it results in higher online shopping costs and delivery delays for consumers. Chinese e-commerce platforms like Shein and Temu are affected, resulting in higher product prices. The policy has drawn international attention, as the UK and the EU consider similar measures.

05/02 03:05

In 2025, the US-China trade war heated up: China called for the removal of unilateral tariffs in order to facilitate dialogue.

On May 2, 2025, China's Ministry of Commerce announced it is evaluating the United States' willingness to enter into dialogue, reiterating that the U.S. must remove unilateral punitive tariffs as a precondition for negotiations. The U.S. has imposed tariffs of 145% on Chinese goods, and China has retaliated with tariffs of 125%, resulting in a decline in U.S. exports to China, impacting 860,000 jobs, with the agricultural sector hit hardest. Trade tensions between the two countries are escalating, with growing calls for dialogue and tariff cuts.

Product Prices Skyrocket: Increases Up to 100%, Consumers Notice the Impact

On the eve of the U.S. canceling the duty-free policy for small packages, SHEIN and Temu simultaneously adjusted their product prices on the U.S. site on April 25. According to data from the Chinese e-commerce pricing and sales tracking platform Geekbi, some product prices on both platforms have increased by 40% to 100%. For example, one consumer noted that a Shein sports suit originally priced at $19 rose to $41 in just two days, nearly doubling; another Temu user found that a product priced at 129 yuan required an import tax payment of 183 yuan, where the tax was higher than the product's price.

Initially, Temu attempted to list import taxes separately on the checkout page, but due to consumer backlash over high tax amounts, they recently switched to only displaying "U.S. warehouse" products, which are pre-imported to the U.S. and do not require additional import taxes. SHEIN still retains some direct-from-China products but does not list the tariff impact separately in the pricing.

Supply Chain Overhaul: Temu's Direct-from-China Products Nearly Disappear, Shift to U.S. Warehousing

Temu's supply chain strategy has undergone a significant shift. According to reports from The Wall Street Journal and Wired, Temu has almost completely removed all products shipped directly from China, instead showcasing items labeled as "local." These products have been pre-imported to the U.S. by sellers and stored in local warehouses, with import taxes already paid, avoiding additional fees for consumers at checkout.

This move by Temu is not only to reduce consumer price sensitivity but also reflects the platform's quick response to high tariff policies. It is reported that as early as February, Temu required Chinese suppliers to pre-ship products in bulk to U.S. warehouses and began recruiting local U.S. merchants, planning to sell only local products in the future.

As for SHEIN, while it still retains some direct-from-China products, it is also actively promoting supply chain diversification. Reports indicate that its suppliers have started setting up factories in Vietnam, Turkey, Morocco, and other locations to mitigate risks.

Advertising Spending Drops Sharply: Google Ads Nearly Disappear

In terms of advertising, SHEIN and Temu's exposure in the U.S. market has significantly decreased. According to data from advertising company Tinuiti, in early April, one in five ads in Google search results came from these two platforms, but by early May, their ads had almost disappeared from the Google network.

Additionally, according to a report by China Times News Network, Temu's daily advertising spending on platforms like Facebook, Instagram, TikTok, Snap, and YouTube decreased by 31% from March 31 to April 13 compared to the previous 30-day average; SHEIN's spending decreased by 19%. This strategic adjustment may be related to the platforms' efforts to control costs and address declining sales.

App Store Rankings Decline: From Top to 6th and 11th Place

Due to price increases and reduced advertising exposure, SHEIN and Temu's rankings in U.S. app stores have also seen a noticeable decline. According to reports from ETtoday and AASTOCKS, as of May 1, SHEIN and Temu's rankings in the U.S. App Store shopping category have dropped to 6th and 11th place, respectively, far below their consistent top performance over the past two years.

Shift in Consumer Behavior: From "Bargain Hunting" to "Careful Budgeting"

Facing the dual pressure of prices and taxes, consumer shopping behavior has also changed. Some users have started turning to local platforms or choosing "U.S. warehouse" products to avoid high tariffs. One parent noted that shipping two dresses from China for her daughter's graduation cost as much as 1,300 yuan, forcing her to switch to shopping on local U.S. platforms.

Moreover, Temu and Shein's price advantage is no longer apparent. Some analyses indicate that the price gap between Temu and Amazon has narrowed from the original 20%-30% to 10%-15%, with sales in some categories dropping by more than 30%.

References

People Also Ask...

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