Since the closure of the so-called “de minimis” trade loophole, which allowed small packages from China to benefit from customs exemptions, the e-commerce landscape in the United States has been shaken. Online retail giants such as Shein and Temu, once dominant, are now seeing their business models shaken. How are these companies responding to this new situation, and what are the implications for American consumers?
Impact of the “de minimis” closure: Disruption for Shein and Temu
Table of Contents
The U.S. decision to close the customs exemption known as “de minimis” has had a significant impact on Chinese e-commerce companies. Until then, this law allowed companies like Shein and Temu to import low-cost goods, exempt from customs duties, as long as their value did not exceed $800. However, on May 2, 2025, this exemption was closed, disrupting the market. Shein, known for its fashionable, low-cost clothing, saw a drastic drop in the number of daily active users in the United States. Sensor Tower reports a 25% decline between March and May 2025. Similarly, Temu, another major player, lost 52% of its daily active users during the same period. These statistics are not surprising given the direct impact of new tariffs on import costs, which inevitably affect the final prices offered to consumers.
CompanyDrop in Daily Users Drop in Monthly UsersApp Store Rankings
| Shein | 25% | 12% | 60 |
|---|---|---|---|
| Temu | 52% | 30% | 132 |
| Rankings in the Apple App Store confirmed this downward trend. Shein, which once held a comfortable place among the top ten apps, now sits at number 60. Temu, which once shone among the top three, has fallen to number 132. These market shifts demonstrate the immediate and significant impact the closure of the de minimis exemption has on platforms. | Discover how the recent closure of the de minimis trade loophole is impacting demand for fashion giants Shein and Temu in the United States. Analyze the consequences of this regulation on the market and consumer habits. | Implications for US Consumers | For consumers, these changes translate into increased costs, as tariffs now reach up to 35% for certain products such as clothing. The prices that made Shein and Temu so popular are no longer sustainable, directly impacting consumers’ wallets and forcing them to seek other alternatives. |
A list of consequences for consumers:
Reduction in affordable options available online.
Potential decline in product diversity in the US market.
Need to turn to local brands or other international platforms.
- This new pricing structure also pushes consumers to redirect spending toward brands like Zara, H&M, or Uniqlo, which, despite higher prices, do not have the added burden of massive tariffs. Such a change could reshape purchasing preferences in the US, previously driven by the constant search for bargains.
- https://www.youtube.com/watch?v=1_nGdsS2Jfs
- Strategic Readjustments: Shein and Temu’s Response to the New Legislation
- Faced with these unprecedented challenges, Shein and Temu were forced to review their business strategy in the United States. The first significant move was a significant adjustment to their advertising budget. In May 2025, Temu reduced its advertising spending by 95% compared to the previous year, while Shein made a 70% reduction. This cost-cutting strategy reflects an attempt to manage expenses in a context where profit margins are under pressure. Some companies are choosing to diversify their efforts and refocus their resources on markets outside the United States. For example, Shein and Temu have seen an increase in their popularity in Europe, Latin America, and South America, taking advantage of these markets less affected by tariff controversies. Strategies adopted: Massive reduction of advertising spending in the US market. Increased investment and operations in new markets, particularly in Europe. Modified logistics models to adapt to the tariff constraint. Discover how the closure of the de minimis trade loophole led to a drop in demand for Shein and Temu brands in the United States, transforming the e-commerce landscape and its implications for consumers.
A key aspect of this reorganization is the need to invest in local logistics infrastructure. Temu, for example, has begun developing a network of fulfillment centers in the United States to reduce international shipping costs. This approach aims not only to minimize costs but also to improve delivery times for consumers.Logistics: Rethinking Operational Models The integration of local fulfillment centers marks a trend toward centralizing and streamlining operations. Shein and Temu are now considering strategic partnerships with established logistics companies in the United States, a move that could prove crucial for maintaining competitive market access. The transition from a direct dropshipping strategy to a hybrid distribution model potentially allows for better supply chain management in the face of global economic fluctuations.For industry observers, the question remains whether these adjustments will be sufficient to offset the loss of market share. The future of Shein and Temu in the US market will largely depend on their ability to adapt their business models to these new realities. This likely includes attacking the high-end market, competing directly with brands like Asos, Boohoo, and Fashion Nova.
The effect on competitors: opportunity or threat? The closure of the “de minimis” system not only changes the landscape for Chinese companies but also has a direct impact on their local and international competitors. Companies like Zara, H&M, Uniqlo, and Primark may find an opportunity in this situation, by capturing some of the American consumers who are now looking for local alternatives with costs less affected by tariffs. However, for some brands like Bershka and others that had become accustomed to competing with the low prices of Shein and Temu, the challenge will be to maintain their appeal despite potentially less competitive prices. The redistribution of demand could therefore force a review of pricing strategies and market positions for many of these companies.
Company Post-Tariff Strategy Expected Impact Zara Emphasis on local collections
Increased market share H&M
New focus on sustainability
- Strengthened customer loyalty
- Uniqlo
- Expanding Digital Offerings
Discover how the closure of the de minimis trade loophole is impacting demand for SheIn and Temu in the United States, revealing the economic and regulatory challenges reshaping the e-commerce landscape. Challenges for Small RetailersFor smaller players in the market, the impact could be much more difficult to manage. While giants have the resources to adapt to new economic realities, smaller businesses may struggle to maintain a competitive offering. They may have to turn to creative solutions, such as using e-commerce platforms like Shopify, which offer alternatives to maximize online reach and efficiency.
Possible consequences for small retailers:
Trend toward market consolidation to remain competitive. Search for new distribution methods that are more aligned with pricing constraints. Investments in green e-commerce platforms. Towards New Horizons: Emerging Markets as a Lifeline For Shein and Temu, the future seems to depend on their ability to navigate new growth opportunities. With the US market becoming increasingly hostile to low-cost imports, emerging markets are now attracting the attention of these giants. Indeed, according to HSBC analysis, users outside the US have become the majority, representing 90% of Temu’s total business in the second quarter of 2025. These new directions offer a significant opportunity to offset losses suffered in the US market. Developing economies often seek platforms that offer affordable and accessible products, as Bershka and Primark have already done.
Expansion strategies to regions like Latin America and parts of Europe are already showing promising signs. By entering these high-potential markets, Shein and Temu could well reinvent themselves successfully. International expansion becomes more than an option; it is essential to the sustainability and long-term growth of these e-commerce giants. Potential market Opportunity Logistics supportEurope Strong demand for affordable goods Agreements with local partners Latin AmericaGrowth of the middle class
Southeast Asia
Increase in online shopping Strategic warehouse networksBusinesses now have to fight on multiple fronts. This new phase of expansion does not come without its share of additional challenges, such as adapting to local regulations, ethical issues related to working conditions and managing the costs associated with having a physical presence in these new markets. The closure of “de minimis” in the United States has certainly shaken up the playing field, but it also offers opportunities for strategic renewal and increased innovation. The next few years will see whether Shein and Temu manage to turn this crisis into a springboard to consolidate their status as global leaders in e-commerce.
