Temu & Shein's Great Pivot
Beyond De Minimis: The Tariff Shockwave Reshaping Temu, Shein, and the Future of Cross-Border Retail
Introduction: E-Commerce Giants in the Tariff Crosshairs
In 2025, a sharp shift in US trade policy, particularly a crackdown on the "de minimis" rule (which allowed US$800 or less in goods to be imported tarifffree), thrust Chinese e-commerce giants Temu and Shein into an unprecedented strategic challenge. These companies had masterfully leveraged this rule, alongside China's robust supply chain, to penetrate global markets with highly competitive pricing, significantly altering parts of the retail landscape.
Now, the sudden rise of tariff barriers directly erodes their core price advantage and compels a profound reassessment of their business models, global supply chains, and overall expansion strategies. This article, from a neutral business analysis perspective, dissects this tariff storm, evaluates its commercial impact on these two representative platforms, and explores how they are attempting to navigate the turbulence and recalibrate for sustainable growth. Their responses offer a valuable case study in the vulnerabilities and adaptability of fast-growing international enterprises facing shifts in global trade regulations, and reveal potential future shifts in the global e-commerce landscape.
The "De Minimis" Rule – From Tailwind to Headwind
Understanding the current challenges faced by Temu and Shein hinges on understanding the "de minimis" rule – its history and its profound impact on cross-border e-commerce. This provision, once an "invisible wing" دعم their ascent, has abruptly tightened, fundamentally altering its role.
Ironically, when the duty-free threshold was significantly raised from $200 to $800 in 2015, key initial beneficiaries and proponents included US domestic e-commerce giants like Amazon, aiming to simplify customs and boost the then-nascent e-commerce sector. However, Temu and Shein later maximized this rule's utility through their optimized direct-to-consumer small parcel models, allowing a vast volume of low-ticket items to reach US consumers tariff-free. Data indicates that of the 1 billion parcels entering the US under this rule in 2023, a significant portion originated from Temu and Shein (a US House committee investigation suggested these two platforms accounted for over 30% of such parcels in 2024). Temu even reported a staggering year-over-year sales increase of over 800% in early 2024.
However, early 2025 marked a sharp reversal. Concerns within the US over potential misuse of the rule – such as creating unfair competition for domestic retailers and circumventing compliance checks – culminated in targeted policy pressure on Chinese e-commerce.
Policy Rollercoaster:In February 2025, the US administration first signaled an intent to revoke de minimis eligibility for Chinese goods. Though briefly paused due to technical reasons, the policy direction was clear. By April, the change was confirmed: effective May 2nd, de minimis for Chinese goods was terminated, with plans to progressively levy substantial tariffs (initially 30% dificuldades or a $25 per-package fee, with planned escalations to 120% or even a $200 flat fee per package).
Immediate Market Impact: Post-May 2nd, actual applied tariffs reportedly reached as high as 120%-145%, or a flat $100 fee per package. This drastic cost shift led to an immediate drop of over 85% in de minimis parcel volume from China.
A Brief "Recalibration": On May 12th, following US-China trade talks in Geneva, the White House announced a "recalibration," reducing the punitive tariff rate on Chinese small parcels to 54% and canceling some of the more extreme planned flat fees. However, even at 54%, the added cost burden remains a significant operational challenge for e-commerce platforms whose business models are acutely sensitive to low costs.
The golden era of the "de minimis" rule has effectively ended. For Temu and Shein, it has transformed from a growth accelerant into a significant constraint in the US market.
Tariff Shockwaves – Rippling Across Platforms, Sellers, and the Retail Ecosystem
The acute adjustments in US tariff policy have sent immediate shockwaves across the cross-border e-commerce value chain, hitting Temu and Shein 가장 شدة, with significant fallout for Chinese sellers and broader reverberations for both US domestic and global retail landscapes.
Platforms Face an "Earnings Gauntlet"
The most direct impact on Temu and Shein manifested in their key performance indicators. In late April 2025, as anticipation of policy changes peaked, Shein's US sales reportedly plummeted 23% week-over-week, with Temu seeing a 17% drop in the same period, according to credit card transaction data analyzed by Bloomberg Second Measure. The impact intensified in May, with Sensor Tower market intelligence data revealing a staggering 58% month-over-month drop in Temu's daily active users in the US.
To counter soaring costs, both platforms were forced to significantly raise prices. Some items on Shein reportedly saw prices triple or quadruple. Temu not only increased listed prices but also added "import fees" that could reach 130%-150% of the item's value, as reported by Caixin. Operationally, Temu rapidly switched between its fully-managed, semi-managed, and newly created "Y2" (direct-from-China under semi-managed) models, even briefly halting and then restarting its fully-managed US operations. Shein, meanwhile, explored diversifying its supply chain географически and launched a POP (Platform Open Plan) marketplace model in the US, shifting some risk to sellers.
Facing US market headwinds, both Temu and Shein drastically cut their US advertising budgets, redirecting resources to emerging markets in Europe and Latin America. Temu's ad spend in Brazil, for example, reportedly surged by 800% year-over-year, according to Sensor Tower. These strategic shifts were also reflected in their financial performance; Shein, for instance, saw a notable decline in net profit in 2024 despite revenue growth.
Sellers: Navigating a Tight Squeeze
The platforms' strategic pivots directly squeezed Chinese sellers, who faced a multi-pronged crisis: plummeting orders, severe customs clearance delays (from one day to several days or even a week), and soaring operational costs, particularly a near-doubling of logistics fees. "Low-value declaration" tactics previously used by some freight forwarders became highly risky, with a greater chance of seizures and heavy fines.
New platform operational models also presented fresh challenges. Shein's POP model, while offering pricing autonomy, came with uncertainties in platform-driven traffic allocation and high return processing costs. Temu's "direct-from-China" semi-managed model, while reducing overseas warehousing risks, lacked competitiveness in shipping times and costs. Many sellers felt that the platforms were, to a degree, transferring the new tariff burdens and compliance pressures onto them.
Despite these difficulties, most sellers actively sought solutions, either by following platforms into new, albeit less profitable, "blue ocean" markets or by pivoting their business models entirely, such as shifting focus from export to the domestic Chinese market.
Ripple Effects: US Retail and Global Spillovers
The tariff impact also reverberated through the US domestic retail market. Large retailers like Walmart and Amazon, leveraging their scale, largely stated they would try to absorb initial costs to maintain price stability. In contrast, some smaller US-based retailers reliant on cross-border direct-to-consumer shipments were forced to suspend orders due to cost pressures.
Globally, Chinese manufacturers facing shrinking US orders and excess inventory began redirecting products to European and other markets, potentially triggering local price wars. Notably, other countries like Ecuador have started to follow the US lead, imposing additional duties on parcels from platforms like Temu and Shein, signaling an increasingly complex global regulatory landscape for cross-border e-commerce.
Survival and Strategic Evolution: Temu and Shein's Multi-Path Gambit
Far from capitulating to the tariff onslaught and ensuing performance dips, Temu and Shein swiftly initiated multi-dimensional strategic adjustments. They are not just seeking survival in a suddenly hostile market but are also attempting to recalibrate their long-term growth trajectories, a process that is stress-testing their agility and fundamentally reshaping their core business logic.
Temu: Speed and Agility in Market Diversification
Temu's response has been a showcase of its internet DNA: rapid iteration, flexible maneuvering, and swift execution.
Its most immediate reaction involved agile shifts in its operational model, cycling through fully-managed, semi-managed, and the newly-conceived "Y2" (direct-from-China under semi-managed) frameworks. The brief, dramatic suspension and subsequent reactivation of its fully-managed US operations underscored the decision-making challenges under intense external pressure, as it sought an optimal balance.
Concurrently, Temu decisively reallocated resources and strategic focus towards other international markets with perceived higher growth potential. Europe became a key target, with significantly increased advertising spend (e.g., 40% YoY in France, 20% in the UK, per Sensor Tower) and a strategic partnership inked with logistics giant DHL in April 2025 to bolster local operational capabilities, as reported by Caixin. Latin America, particularly Brazil (where ad spend reportedly skyrocketed 800% YoY, per Sensor Tower), and Australia (where its platform opened to local sellers in May 2025, according to Caixin) also became major offensive fronts. By Q2 2025, non-US users reportedly constituted 90% of Temu's global monthly active users, with its fastest new user growth occurring in less affluent, more price-sensitive markets.
Publicly, Temu stated it supported adjustments to the de minimis rule, provided they were "fair and in the best interest of consumers," a carefully worded stance attempting to project cooperation.
Shein: Deep Transformation, Betting on "Platformization" for a Second Growth Curve
In contrast to Temu's emphasis on operational flexibility, Shein's response reveals a more profound, structural strategic consideration: a determined push towards "platformization." This move aims to reduce over-reliance on its singular direct-to-consumer fast-fashion model and its heavy dependence on US small-parcel direct shipping, thereby building a more resilient and expansive "second growth curve."
Shein, which rose to prominence through its "small-order, rapid-turnaround" self-operated model, had its founder, Chris Xu, envisioning a platform strategy早在 2020 to achieve multi-category coverage and deeper localization, according to LatePost. The rise of competitors like Temu undoubtedly accelerated this pivot. Shein has explored various platform models:
OBM (Original Brand Manufacturer) Empowerment (early form): Initiated in 2020, where brands supplied products, and Shein handled subsequent operations.
Marketplace/POP (Platform Open Plan): Sellers operate their own stores, set prices, and manage local fulfillment, with Shein taking a commission (reportedly around 10%).
Semi-Managed Model:A current focus. The platform assists with pricing, while sellers manage product selection and local fulfillment, primarily targeting mature sellers with existing overseas inventory.
Empowered Consignment (upgraded OBM): Opened for registration in 2023, similar to a fully-managed model but with Shein reportedly maintaining a broader evaluation beyond just price, including product quality and visual appeal.
This platform strategy is showing early results. During the 2024 holiday season, sales in some key platform categories reportedly grew by over 160% YoY. By 2024, non-apparel items accounted for over 40% of total revenue, up from less than 20% in 2022. Shein aims to help 10,000 platform sellers achieve annual sales оркеstr $1 million within three years.
To support this transformation, Shein is making "heavy" investments in infrastructure: establishing large regional fulfillment centers in the US and Europe (significantly reducing local delivery times to 3-5 days), which are also being opened to its platform sellers. It's also exploring supply chain diversification beyond China. In its merchant relations, Shein emphasizes long-term partnerships rather than solely focusing on an aggressive price squeeze, offering incubation support and transparent rules. Its leadership has publicly stressed "steady" and "sustainable growth" over sheer speed, as stated by Executive Chairman Donald Tang to CNBC.
Industry Mirror: Retailers' Universal Defense Playbook
Globally, retailers facing trade uncertainties have commonly adopted strategies such as optimizing inventory, diversifying supply chains (e.g., shifting to Vietnam, Mexico), exercising caution in market expansion, strengthening contractual risk management, and implementing sophisticated profit-and-loss controls, as analyzed by Flywheel.
Future Outlook – Navigating the Fog and a "New Normal"
The tariff storm is far from over. Its long-term impact on Temu, Shein, and the entire cross-border e-commerce ecosystem remains challenging and uncertain.
Twilight of "De Minimis" and Persistent Policy Pressure
The era of easy "de minimis" benefits is effectively closed. Even with the tariff rate adjusted to 54%, it remains a heavy blow to low-cost, small-parcel models. The prevailing expectation is that the US will continue to tighten such rules. Alternative customs entry methods, while existing, cannot fully replicate the past ease and low cost. Experts suggest current adjustments primarily offer a buffer for companies to transition to more traditional supply chain models (ocean freight + overseas warehousing).
Core Competitiveness: Resilience Tested, Growth Challenges Unprecedented
The tariffs undoubtedly weaken Temu and Shein's price advantage. However, their core competitiveness extends beyond just tax-free status; it's rooted in their direct-to-factory supply chain models, which offer inherent cost and efficiency benefits, as analyzed by institutions like Yuan Chuan Institute. Even with standard tariffs, they might retain some price competitiveness in certain categories. Their success in Europe (where most small parcels are taxed) also attests to their model's resilience. Nevertheless, losing their sharp price edge and policy tailwinds in the massive US market presents an unprecedented growth challenge.
Industry Trends: Survival Rules in the "New Normal"
Supply Chain Reinvention: Globalization, diversification, and resilience will take precedence. Logistics will shift from airfreight small parcels to ocean freight bulk shipments plus overseas warehousing; production will further diversify to Southeast Asia, Latin America, etc.
Business Model Evolution: Platformization, brand-building, and deep localization will become mainstream.
Rising Compliance Costs:Tariffs, VAT, data privacy, labor standards, and carbon tariffs will make robust compliance a core competitive factor (or a fatal flaw). US CBP has explicitly stated increased enforcement against misdeclarations of origin.
A Warning for All Outbound Enterprises: Over-reliance on a single market or a single policy benefit is a high-risk strategy. Diversified, resilient global strategies are essential.
Complex Global Trade Landscape: US-China trade friction is likely to persist, and other countries may implement similar protectionist measures.
Conclusion – Reshaping in Pain: The Evolution of Globalizing Chinese Enterprises
The US tariff storm has inflicted severe pain on Temu and Shein but has also accelerated their strategic evolution. This "stress test" highlights the resilience and adaptability of leading Chinese outbound enterprises.
Insight 1: From Model Arbitrage to Deep Capability Building
If early success was partly due to policy arbitrage and innovative models leveraging China's supply chain, future competitiveness will increasingly depend on deeply cultivated, comprehensive capabilities: globalized supply chain management, nuanced local market operations, strong brand equity, and robust global compliance. This marks a necessary evolution from "growth hacking" to "matured, sustainable operations."
Insight 2: Takeaways for Western Market Participants
For Competitors:The strategic adjustments forced upon Temu and Shein may temper their price aggression in some markets but could also forge more resilient, globally adapted adversaries. Understanding the true nature of their supply chain advantages (beyond just tax breaks), their rapid iteration capabilities, and their aggressive expansion in emerging markets remains critical.
For Investors:Evaluating Chinese outbound enterprises now requires a sharper focus on their genuine, sustainable competitive advantages男孩 policy benefits are stripped away. Their strategic reserves against geopolitical risks, execution capabilities, and the long-term resilience of their business models become paramount.
For Policymakers:Tariff and trade protection measures have complex, multifaceted impacts on market structures, consumer welfare, domestic industries, and the international trade order. Policies should be based on careful assessment and dynamic review to balance national interests with the health of global commerce.
Final Outlook: Reshaping the Globalization Narrative in Uncertainty
The "tariff trial" for Temu and Shein in the US market is far from over. Whether they can successfully navigate the current fog and continue to thrive in a challenging "new normal" will be a testament to their strategic wisdom and execution. This episode is not just a story about two companies; it's a significant case study in the broader narrative of Chinese enterprise globalization. It underscores that in an increasingly complex and uncertain global economic landscape, only those firms capable of profound self-reinvention, balancing efficiency with compliance, and truly integrating global resources with deep local understanding will achieve sustainable success and write the next chapter for cross-border e-commerce.