^{Photo: Los Angeles Times}

Two of the world’s fastest-growing e-commerce platforms, Temu and Shein, are seeing dramatic declines in their U.S. market performance as recent tariff policies and the closure of a key trade exemption have started to bite. Daily and monthly user engagement, ad spending, and App Store rankings have all plummeted in the wake of the May 2 repeal of the “de minimis” rule, which allowed Chinese companies to ship products valued under $800 into the U.S. without paying tariffs.

U.S. User Engagement Takes a Nosedive

According to Sensor Tower data:

• Temu's U.S. daily active users (DAUs) fell by a staggering 52% in May compared to March.
• Shein’s DAUs dropped by 25% over the same period.
• Monthly Active Users (MAUs) were also affected, down 30% for Temu and 12% for Shein.

These engagement drops were mirrored in Apple App Store rankings:

• Temu slipped from a consistent top 3 spot in 2024 to an average rank of 132 in May 2025.
• Shein dropped from a top 10 ranking to an average of 60 during the same period.

Advertising Budgets Slashed

As the Trump administration implemented sweeping tariffs on Chinese imports—including the end of the de minimis exemption—both platforms have drastically cut their U.S. ad budgets.

• Temu’s ad spending in the U.S. plunged 95% year-over-year in May.
• Shein’s spending dropped 70%, according to Sensor Tower's Seema Shah.

April spending was already on the decline before May's nosedive:

• Temu’s YoY ad spend in April dropped 40%
• Shein’s April spend was down 65%

These cuts reflect not just cost control but also a strategic reassessment of the U.S. market.

Tariff Impact and Business Model Shift

The elimination of the de minimis loophole significantly disrupted both companies' shipping logistics. Previously, direct-to-consumer drop shipping from China allowed Temu and Shein to bypass hefty U.S. tariffs. Now, the companies are pivoting:

• Temu has started investing in U.S.-based warehouse infrastructure, a costly shift from its low-cost Chinese supply chain model.
• Shein, similarly, has begun exploring distribution centers outside China to minimize cost exposure.

Research from Tech Buzz China in March 2025 predicted that a 50% tariff would start to undermine Temu’s pricing advantage. The current tariff on former de minimis imports stands at 54%, down from a temporary peak of 120% following a 90-day U.S.–China tariff truce.

“All these additional costs and regulatory hurdles are clearly hurting Chinese platforms’ U.S. growth prospects,” said Rui Ma, founder of Tech Buzz China.

Global Expansion Gains Momentum

Despite headwinds in the U.S., Temu is not slowing globally.

According to HSBC, in Q2 2025:

• 90% of Temu’s 405 million global MAUs were from outside the U.S.
• Strongest growth occurred in Europe, Latin America, and South America
• Expansion is particularly noticeable in price-sensitive, developing economies

Temu’s parent company, PDD Holdings, reported weaker-than-expected Q1 earnings but emphasized tariffs as a key pressure point for U.S.-based sellers.

“Many Chinese platforms are now actively redirecting their efforts toward other markets such as Europe,” added Rui Ma.

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Temu and Shein's meteoric rise in the U.S. has hit a significant roadblock as regulatory and trade policy shifts, particularly the closure of the de minimis loophole, have taken hold. With user metrics dropping, ad budgets slashed, and supply chains being restructured, both companies are recalibrating for survival—and future growth—beyond the U.S. market.

Their experience serves as a real-time case study on how international policy changes can reshape the fortunes of even the most agile digital disruptors.