New tariffs set to take effect on May 2 are impacting the operational costs of Temu and Shein, leading to expected price increases.
Impact of New Tariffs on Operational Costs
Under the new U.S. trade strategy, tariffs on imports from China could reach as high as 145%. This change eliminates the de minimis rule, which previously exempted products worth up to $800 from customs duties. Both Temu and Shein will now incur import charges of 30% of the item's value or $25, increasing to $150 per item by June. Shein confirmed they are "adjusting prices to reflect increased operational expenses."
Advertising Cost-Cutting Strategies
Both companies are reducing their advertising budgets. Temu has lowered its average daily advertising spend by 31% from March 31 to April 13, while Shein has cut its spending by 19%. These reductions have affected their visibility on platforms like Pinterest and Instagram.
Prospects for New Market Expansion
In light of anticipated declines in U.S. demand, Temu is looking to expand its operations into Europe and Australia, where the de minimis threshold is under $1,000, making it more attractive for retailers affected by U.S. tariffs.
The new import tariffs in the U.S. are placing significant pressure on Chinese brands like Temu and Shein, forcing them to either raise prices or seek alternative markets for their products.
