Tariff reprieve gives Shein, Temu, and TikTok Shop much-needed breathing room

The insight: Shein and Temu are returning to (some of) their old ways after getting a reprieve on tariffs.

• Shein is lowering prices for a multitude of products and promising shoppers they won’t have to pay additional fees, tariff-related or otherwise, at checkout, per Bloomberg.
• Temu has resumed shipping from China, after a temporary pivot to only selling inventory located in the US.

Why it matters: With no end to the uncertainty surrounding the US-China trade war, Chinese ecommerce platforms are trying to make the most of the breathing room they’ve been given. Both Shein and Temu suffered a precipitous drop in US sales after raising prices at the end of April to offset tariffs and the end of de minimis.

• Shein’s sales were down 15% YoY for the week ended May 4, while Temu’s fell 10% in the same period, per Bloomberg Second Measure data.
• Daily traffic to both retailers’ sites was down more than 20% on average in the 15 days following the April 25 price hikes, compared with the prior 15-day period, according to Similarweb.

Shein and Temu are far from the only victims. TikTok Shop also had a sales drop-off beginning in March, sources told Business Insider, with daily sales from foreign sellers down as much as 20% to 25% MoM. Ironically enough, the biggest threat to TikTok Shop now is not the TikTok ban—which is likely to be delayed indefinitely—but tariffs, which are pushing sellers’ costs to unsupportable levels and preventing new merchants from joining the marketplace.

Our take: Shein and Temu’s quick return to the previous status quo shows that despite their strenuous efforts to reshape their US models, the two companies have few good options for managing the effect of tariffs. Their survival—along with that of TikTok Shop—will depend on their ability to diversify sourcing, attract more merchants with local (or non-Chinese) inventory, and convince shoppers of their value proposition.

Go further: Check out our FAQ: How the US-China Trade War Is Affecting TikTok Shop, Temu, and Shein and Impact of Tariffs on US Businesses.