April 17, 2025
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Will SHEIN and Temu’s Incoming Price Increases Due to Tariffs Result in Diminished Sales Growth?
Fast-fashion retailer SHEIN and its low-cost competitor Temu are both in the crosshairs as President Donald Trump’s escalating tit-for-tat tariff war with China — and off-again, now-on-again closure of the de minimis loophole, set once more for May 2 — threaten the core of their business models.
According to Forbes contributor Mark Faithfull, Temu and SHEIN face significant and imminent pressure from these dual headwinds.
“Both companies will be hit by the new import levies, which will mean taxes of up to 145% being applied to Chinese products, and specifically they will also be impacted by President Trump’s cancellation of the so-called ‘de minimis’ exemption,” Faithfull began.
“Under that rule, shipments worth less than $800 could be imported duty-free, and this loophole was crucial in enabling both to send low-cost online purchases direct to the customer without incurring additional levies. It will be removed from May 2,” he added.
And price increases certainly seem to be on the horizon for both Chinese e-tailers, according to very similar press releases put forth by Temu and SHEIN.
“Due to recent changes in global trade rules and tariffs, our operating expenses have gone up. To keep offering the products you love without compromising on quality, we will be making price adjustments starting April 25, 2025. Until April 25, prices will stay the same, so you can shop now at today’s rates. We stand ready to make sure your orders arrive smoothly during this time. We’re doing everything we can to keep prices low and minimize the impact on you,” a SHEIN customer notice stated.
Temu echoed this sentiment, per CBC.
“We’ve stocked up and stand ready to make sure your orders arrive smoothly during this time,” Temu’s statement read. “We’re doing everything we can to keep prices low and minimize the impact on you.”
Temu and SHEIN Saw Massive Growth in March and April but Are Now Slashing US Ad Spend Over Tariffs
Attributing a massive rush by U.S. consumers to beat the clock on tariffs, Forbes (quoting Bloomberg Second Measure data) outlined that SHEIN had experienced a massive 29% jump in revenue for March on a year-over-year basis — an upswing that only further advanced to 38% in the beginning of April.
Temu saw much of the same, although its numbers were even more impressive. Regarding March, Temu increased revenue by 46% versus the year prior’s figures, and for early April, that number skyrocketed to 60%.
At the same time, both retailers decided to dial back their U.S. social media ad spend. Citing data from Sensor Tower targeting the two weeks spanning the end of March through April 13 as compared with the prior 30 days, Forbes indicated that SHEIN had curtailed its American social media ad spend by 19%. Temu, however, cut even deeper, slashing its ad spend by 31%.
BrainTrust
John Hennessy
Retail and Brand Technology Tailor
Brian Numainville
Principal, The Feedback Group
Jeff Sward
Founding Partner, Merchandising Metrics
Recent Discussions
Discussion Questions
Will SHEIN and Temu’s imminent price increases significantly impact revenue for 2025/2026? If tariffs continue, will U.S. consumers acclimate to the price increase, or will other competition arise?
How significant of a price hike do you expect these retailers to enact? Which categories are most likely to suffer the greatest increases, and which categories may be able to absorb some of the brunt via lesser margins?
Will the de minimis loophole actually be closed for good this time, in your opinion? Why or why not?
Poll
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Tariffs will cause price rises across all of retail, not just at Shein and Temu. As there is nowhere near enough financial headroom for consumers to cope with further stiff price hikes, retail volumes – the amount people buy – will fall. How this plays out for Shein and Temu depends on the relativity of their prices. If they’re still among the lowest priced retailers, they may secure additional custom as more shoppers trade down to them. This will help offset losses from their existing consumers buying less. But, overall, this whole situation isn’t a good thing for either player. Many purchases made on their marketplaces are discretionary and are underpinned by low prices which allow consumers to purchase in a carefree fashion.
As imported goods become more costly, I fully anticipate that domestic manufacturers will take the opportunity to match the price increases. This may blunt the impact on SHEIN and Temu. Truthfully, though, nobody really knows what’s going to happen.
In the event that tariffs persist, U.S. consumers may initially resist price increases, but they may eventually adjust if they perceive the value and quality to be worth the price increase. Nevertheless, this adjustment period could also present opportunities for other competitors to enter the market with more competitive pricing.
Due to this, it may be necessary for SHEIN and Temu to focus on improving their brand loyalty and differentiating their offerings in order to maintain their market share.
In order to attract consumers who are cost-conscious, competitors may use this opportunity to introduce similar products at lower prices. As well as leveraging marketing strategies that emphasize value and quality, they can position themselves as viable alternatives. Consequently, these competitors may be able to gain a foothold in the market and capture a portion of the market share held by established companies such as SHEIN and Temu.
Closing the de minimis loophole could lead to stricter trade policies, making it more difficult for international retailers to avoid tariffs by shipping low-value goods directly to consumers. As a result of this change, foreign companies may be encouraged to compete fairly, but they may also have increased operational costs, which could result in consumers paying higher prices.
However, it may also encourage businesses to establish domestic operations, which would benefit local economies and help create jobs.
Wow! now that’s a tough one: will doubling costs increase prices? Survey says yes! As for absorbtion, obviously that depends upon the tarriff: no triple digit tariiff can ever be absorbed by more than a token amount.
This will negatively impact sales to the many “Why not, it’s only…” shoppers. These shoppers react to actual price point more than competitive pricing.
What will be the process for collecting tariffs for Temu and Shien shipments that are delivered directly to the buyer’s door?
It’s all about positioning as it relates to price. As prices go up and people can afford to buy less, they will move to more value-oriented providers. If products offered on Shein and Temu are in the value price position, that may blunt some of the reduction in overall sales as people buy less.
It’s crazy that the de minimis loophole wasn’t closed a long time ago. So now, finally, it’s a level playing field, at least where tariffs are concerned. What remains is the efficiency afforded by the factory direct model, which still eliminates many of the costs and inefficiencies of traditional business models. I suspect the Shein and Temu will very much remain a factor in the business. Some of their price advantage may have evaporated, but they can still be a high value provider for many products. And in the inflationary environment we are entering, the ability to be a high value provider is still a big deal.
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Tariffs will cause price rises across all of retail, not just at Shein and Temu. As there is nowhere near enough financial headroom for consumers to cope with further stiff price hikes, retail volumes – the amount people buy – will fall. How this plays out for Shein and Temu depends on the relativity of their prices. If they’re still among the lowest priced retailers, they may secure additional custom as more shoppers trade down to them. This will help offset losses from their existing consumers buying less. But, overall, this whole situation isn’t a good thing for either player. Many purchases made on their marketplaces are discretionary and are underpinned by low prices which allow consumers to purchase in a carefree fashion.
As imported goods become more costly, I fully anticipate that domestic manufacturers will take the opportunity to match the price increases. This may blunt the impact on SHEIN and Temu. Truthfully, though, nobody really knows what’s going to happen.
In the event that tariffs persist, U.S. consumers may initially resist price increases, but they may eventually adjust if they perceive the value and quality to be worth the price increase. Nevertheless, this adjustment period could also present opportunities for other competitors to enter the market with more competitive pricing.
Due to this, it may be necessary for SHEIN and Temu to focus on improving their brand loyalty and differentiating their offerings in order to maintain their market share.
In order to attract consumers who are cost-conscious, competitors may use this opportunity to introduce similar products at lower prices. As well as leveraging marketing strategies that emphasize value and quality, they can position themselves as viable alternatives. Consequently, these competitors may be able to gain a foothold in the market and capture a portion of the market share held by established companies such as SHEIN and Temu.
Closing the de minimis loophole could lead to stricter trade policies, making it more difficult for international retailers to avoid tariffs by shipping low-value goods directly to consumers. As a result of this change, foreign companies may be encouraged to compete fairly, but they may also have increased operational costs, which could result in consumers paying higher prices.
However, it may also encourage businesses to establish domestic operations, which would benefit local economies and help create jobs.
Wow! now that’s a tough one: will doubling costs increase prices? Survey says yes! As for absorbtion, obviously that depends upon the tarriff: no triple digit tariiff can ever be absorbed by more than a token amount.
This will negatively impact sales to the many “Why not, it’s only…” shoppers. These shoppers react to actual price point more than competitive pricing.
What will be the process for collecting tariffs for Temu and Shien shipments that are delivered directly to the buyer’s door?
It’s all about positioning as it relates to price. As prices go up and people can afford to buy less, they will move to more value-oriented providers. If products offered on Shein and Temu are in the value price position, that may blunt some of the reduction in overall sales as people buy less.
It’s crazy that the de minimis loophole wasn’t closed a long time ago. So now, finally, it’s a level playing field, at least where tariffs are concerned. What remains is the efficiency afforded by the factory direct model, which still eliminates many of the costs and inefficiencies of traditional business models. I suspect the Shein and Temu will very much remain a factor in the business. Some of their price advantage may have evaporated, but they can still be a high value provider for many products. And in the inflationary environment we are entering, the ability to be a high value provider is still a big deal.