Shein and Temu Increase Digital Ads in Europe as U.S. Tariff Changes Impact Strategy

US • Business • 05/05 21:01
Shein and Temu Increase Digital Ads in Europe as U.S. Tariff Changes Impact Strategy

Chinese fast-fashion companies Shein and Temu are increasing digital advertising in Europe, particularly in the UK and France, due to the end of the U.S. de minimis tariff exemption on May 2, 2025. This policy change, which removed duty-free status for packages under $800, has disrupted their U.S. operations. In response, both companies are reallocating marketing budgets to Europe and Brazil, adjusting logistics, and facing challenges like inventory shortages and price increases. The shift is impacting digital ad markets, with increased competition in Europe and Latin America.

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Shein and Temu Increase Digital Ads in Europe as U.S. Tariff Changes Impact Strategy

Chinese fast-fashion companies Shein and Temu are increasing digital advertising in Europe, particularly in the UK and France, due to the end of the U.S. de minimis tariff exemption on May 2, 2025. This policy change, which removed duty-free status for packages under $800, has disrupted their U.S. operations. In response, both companies are reallocating marketing budgets to Europe and Brazil, adjusting logistics, and facing challenges like inventory shortages and price increases. The shift is impacting digital ad markets, with increased competition in Europe and Latin America.

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Strategic Shift in Advertising Focus

In April 2025, Shein and Temu ramped up their digital advertising expenditures across Europe, with a particular emphasis on the UK and France. According to data from Sensor Tower, Shein increased its ad spending by 35% month-over-month in both countries. Temu, operated by China’s PDD Group, raised its ad spending by 40% in France and 20% in the UK over the same period.

Year-over-year figures further underscore the aggressive push: Temu’s ad spending in France surged by 115%, while Shein’s spending in the UK doubled compared to April 2024. These increases reflect a broader reallocation of marketing budgets away from the U.S., where both companies had previously concentrated their efforts.

The advertising expansion is not limited to the UK and France. Shein and Temu are also targeting other European markets, including Germany, Italy, and Spain, as they seek to capture a larger share of the continent’s growing fast-fashion e-commerce sector.

U.S. Tariff Policy Sparks Global Realignment

The companies’ strategic redirection follows the expiration of the U.S. de minimis exemption on May 2, 2025. This exemption had allowed packages valued under $800 to enter the U.S. duty-free, a loophole that Shein and Temu had leveraged to offer ultra-low-cost goods to American consumers. The policy change, initiated under former President Donald Trump and continued under the current administration, has significantly increased the cost of doing business in the U.S. for Chinese e-commerce platforms.

In response, both companies have scaled back their U.S. advertising efforts. They are also adjusting their logistics and fulfillment models. Temu, for instance, has transitioned to a local fulfillment strategy, recruiting U.S.-based sellers and shipping from domestic warehouses to avoid direct import duties. However, this shift has led to inventory shortages and customer complaints about product availability and minimum order fees.

Shein, which had already begun stockpiling inventory in U.S. warehouses in anticipation of regulatory changes, is also reportedly raising prices to offset the impact of tariffs. Despite these efforts, both companies are facing margin pressures and a slowdown in U.S. customer acquisition.

European Market Gains Traction

The pivot to Europe appears to be yielding early results. In the UK, Shein saw a 25% increase in app downloads month-over-month, while Temu more than doubled its downloads. However, growth in daily active users has been more modest, with Shein reporting a 5% increase and Temu a 10% rise.

The European fast-fashion market continues to expand, offering fertile ground for Shein and Temu to grow their customer base. According to data from IndexBox, the region’s e-commerce sector remains robust, driven by consumer demand for affordable and trendy apparel.

Expansion Beyond Europe: Brazil in Focus

In addition to Europe, Shein and Temu are also intensifying their advertising efforts in Brazil. Shein increased its digital ad spending in the country by 140% year-over-year in April 2025. Temu, preparing for its official market launch in June 2024, expanded its ad spending in Brazil by an astonishing 800 times compared to the previous year.

Shein, which manufactures some of its products in Brazil for the Latin American market, is using its advertising push to counter Temu’s entry. This mirrors the strategy Shein employed when Temu entered the U.S. market in 2022, suggesting a pattern of preemptive marketing to defend market share.

Operational Adjustments and Supply Chain Overhauls

The end of the de minimis exemption has also prompted significant changes in supply chain operations. Temu has asked its Chinese suppliers to ship products in bulk to U.S. warehouses, a move designed to maintain inventory levels while avoiding direct-to-consumer import duties. However, this model has led to uncertainty about product availability and potential price increases.

Shein, with a more streamlined product catalog and established warehousing infrastructure, may be better positioned to weather the regulatory storm. Nonetheless, both companies are facing increased scrutiny and logistical challenges as they adapt to the new trade environment.

Implications for Digital Advertising Markets

The reallocation of advertising budgets from the U.S. to Europe and Brazil is also impacting the digital advertising landscape. In the U.S., Shein and Temu had become major buyers of digital ad space, second only to Amazon during peak shopping seasons. Their reduced presence is expected to affect ad pricing dynamics and competition among platforms.

Meanwhile, European and Latin American digital ad markets are seeing increased competition and higher bid prices as Shein and Temu vie for consumer attention. This shift underscores the global ripple effects of U.S. trade policy on digital commerce and marketing strategies.

References

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