Shein and Temu Experience Drop in U.S. Demand After Closure of ‘De Minimis’ Trade Loophole

The usage of low-cost e-commerce platforms Temu and Shein has seen a notable decline in the United States, primarily due to tariffs imposed by the Trump administration on Chinese imports and the termination of the de minimis loophole. Recent data indicates that Temu experienced a 52% drop in daily active users (DAUs) in May compared to March. Similarly, Shein’s DAUs fell by 25% during the same period, according to market intelligence firm Sensor Tower. DAUs are crucial as they represent the number of users who engage with a platform daily.

The report also highlighted a decrease in monthly active users (MAUs) for both companies, with Temu’s MAUs declining by 30% and Shein’s by 12% from March to May. Additionally, both platforms saw a significant drop in their rankings on the Apple App Store. Temu, which previously held a top three ranking a year ago, averaged a rank of 132 in May, while Shein fell from the top 10 to an average rank of 60. In recent months, both companies have reduced their advertising expenditures in the U.S. following the tariff announcements.

Temu’s advertising spend plunged by 95% year-on-year, while Shein’s decreased by 70%. Seema Shah, vice president of research at Sensor Tower, noted that these declines in ad spending were evident as early as April. To adapt to the changing landscape, both companies have modified their logistics strategies, shifting away from drop shipping to establishing U.S. warehouses. Rui Ma, founder of Tech Buzz China, indicated that these changes have likely influenced their advertising and customer acquisition strategies.

The cost associated with tariffs has severely impacted their growth prospects in the U.S.

Conversely, Temu is witnessing growth outside the U.S., with non-U.S. users comprising 90% of its 405 million global MAUs in the second quarter, as reported by HSBC. This growth appears to be fueled by demand in Europe and Latin America, particularly in less affluent markets. Many Chinese platforms are now focusing their strategies on expanding into these regions.