On February 4th, 2025, the United States President Trump implemented a 10% tariff on Chinese goods and simultaneously canceled the tax-free policy on small packages. Despite the White House temporarily reinstating the tax-free status for small packages due to parcel backlog two days later, online shopping giants such as Temu and Shein witnessed a continuous decline in their sales in the United States this week, indicating that Trump’s trade measures against China have affected American consumers.
According to Bloomberg Second Measure (BSM)’s analysis of credit card and debit card data, Shein’s sales in the United States have seen a consecutive drop ranging from 16% to 41% over five days starting from February 5th, while Temu under PDD Holdings Inc. experienced a decline of up to 32% during the same period.
Although the decline so far is similar to the traditional post-Christmas sales drop on these platforms, it has reversed the growth trend seen at the end of January and persisted until February 9th, the latest available date for data.
President Trump’s cancellation of the tax-free policy on small packages has meant that parcels under $800 from China will no longer be exempt from tariffs, and Shein and Temu deliver a significant number of such packages to American consumers. Even though this ban has been suspended, American shoppers may refrain from making purchases out of concerns about incurring additional fees.
Bloomberg reported that other factors like seasonality, market competition, and macroeconomic changes may also influence sales.
In a report by the U.S. House of Representatives Committee on China in June 2023, it was stated that almost half of the packages shipped with “small tax-free” status came from China. According to a report by the Peterson Institute for International Economics, packages shipped daily to the U.S. by Temu and Shein constitute approximately 30%.
Nomura Holdings estimated that in 2024, companies including Shein and Temu shipped small packages worth $46 billion to the United States. A report by the U.S. Congressional Research Service stated that Temu and Shein collectively held around 17% of the discount market for consumer goods, fast fashion, and toys in 2023.
Interviews with shoppers and sellers conducted by Wired magazine revealed that Temu and Shein are the two largest Chinese-owned e-commerce platforms in the U.S. In response to President Trump’s announcement of new tariffs on Chinese imports, prices on both websites have begun to increase, and some products have been temporarily removed from the sites.
Fast Company reported that Itamar Zur, CEO of Veho, a shipping company serving brands like Macy’s, Sephora, and Stitch Fix, said that forcing Shein and Temu to pay taxes would create a fair competitive environment for other brands. However, perhaps more importantly, it has changed the market.
As these ultra-low-cost Chinese brands entered the market, many brands felt compelled to compete on prices. But as prices begin to balance out, brands can start competing in other aspects, such as delivery speed and quality. “Shipping products from China takes seven to ten days, but consumers are willing to wait to get the product at such a low price,” Zur said. “However, if the cost of buying from an American brand that can ship within two days is the same or slightly higher, many consumers may choose the American brand.”