In the United States, President Trump imposed tariffs on Chinese goods and ended the De Minimis policy for small packages, causing a significant drop in active users for online retailers Temu and Shein in the country.
According to data from market intelligence company Sensor Tower, from March to June this year, Temu saw a 51% decrease in monthly active users in the U.S., reaching 40.2 million.
During the same period, the number of U.S. shoppers using the Shein app also decreased, albeit not as dramatically as Temu. Sensor Tower’s data shows a 12% drop in Shein’s monthly active users, down to 41.4 million.
For years, Temu and Shein have leveraged the De Minimis policy to ship goods directly from Chinese suppliers to American consumers, thereby maintaining low prices.
In a move signed by President Trump, the U.S. government revoked the “small package tax exemption” policy for goods originating from China and Hong Kong on May 2nd. This policy exempted e-commerce packages valued under $800 from taxes.
The De Minimis policy was originally introduced to facilitate international trade. However, its convenience has facilitated the smuggling of fentanyl from China and the surge in importing cheap clothing, toys, and furniture from China through online platforms like Temu, Shein, and Amazon Haul, making it a target of criticism from both American political parties.
On May 13th, the White House website released a revised version of Trump’s executive order, adjusting the tariff policy for small Chinese packages enacted on April 2nd. Starting from the early hours of May 14th on the East Coast, the tariff rate for small packages imported from China, Hong Kong, and Macau to the U.S. Customs territory was reduced from the original 120% to 54%, while maintaining the $100 per item tariff threshold.
The decline in Temu and Shein usage may be related to reduced advertising spending by both companies. According to Sensor Tower’s data, in the past three months, Temu’s ad spending in the U.S. dropped by 87% compared to the same period last year, while Shein’s decreased by 69%.
Researchers noted that last year, these two companies ranked 10th and 11th respectively among digital advertisers in the U.S., but now they have fallen out of the top 60.
Facing a challenging environment in the U.S., Temu and Shein are now shifting their focus to Europe. In June this year, both companies saw growth in users in France, Germany, the UK, and Spain. However, the growth of Chinese fast fashion companies in Europe may face risks due to the EU’s plan to impose a 2 euro handling fee on packages entering the EU, and the UK government’s consideration of ending its own import tariff exemption scheme.