In recent years, Temu and Shein took over fashion retail with their ultra-cheap prices and fast shipping. But now, a major trade policy change has shaken things up. Tariffs have crushed their cost advantage, and U.S. shoppers are already seeing big changes. The discounts are vanishing, and both companies are scrambling to survive. What’s happening now could reshape how Americans shop for years to come. Let’s break it down.
What “Shutdown” Really Means Right Now
No, Temu and Shein aren’t closing stores; they never had physical shops in the U.S. Instead, the “shutdowns” are happening behind the scenes. The business model that let them ship cheap products directly from China is no more. CBS News reports they’re being forced to rebuild supply chains, abandon their old import systems, and switch to local warehouses. These changes are believed to be permanent. The shutdowns are logistical, not physical. But they’re just as real and just as disruptive.
The Policy Loophole That Made It All Possible
For years, Temu and Shein relied on a trade rule called the “de minimis” exemption. According to Reuters, it let companies avoid import taxes on items under $800. That rule helped flood the U.S. with cheap Chinese products. Chinese low-value exports to the U.S. soared from $5.3 billion in 2018 to $66 billion in 2023, says the Congressional Research Service. The loophole became the rocket fuel behind these platforms’ U.S. rise.
First Warning Signs Hit in Late 2024
The Biden administration made the first move in September 2024. Supply Chain Dive reported that officials proposed stricter rules on Chinese imports using the de minimis rule. A White House fact sheet from September 13 called for tighter oversight, including 10-digit tariff codes and full identification of those claiming exemptions. Morgan Lewis noted the administration’s push to limit de minimis use. Bloomberg Law and PBS confirmed that 126 House Democrats urged Biden to end what they called a trade “loophole.”
Trump’s Executive Order Ends It All
Everything changed on April 2, when President Trump signed an executive order ending the de minimis exemption for China and Hong Kong. The new rules took effect on May 2. According to DLA Piper, Trump invoked the International Emergency Economic Powers Act (IEEPA), citing national security concerns. A White House fact sheet outlined a 30% tariff or $25 per postal item, rising to $50 after June 1. Trump called the old rule a “big scam,” according to The New York Times and Economic Times.
Prices Doubled—Almost Overnight
The new tariffs on Chinese imports in May caused immediate sticker shock. Within days, a $10 T-shirt on Temu jumped to $22 or more after import charges. NextShark and CNBC found some prices soared 145% almost instantly, a $18.47 dress rose to $44.68, with many items doubling or more. U.S. policy imposed tariffs of 120–145% on certain parcels, triggering abrupt price spikes across fast-fashion apps. This wasn’t gradual inflation but a sudden shock that changed shopper behavior.
Temu’s U.S. Users Vanish
Customers left fast. According to Sensor Tower, Reuters, and IndexBox, Temu’s daily U.S. users fell 58% in May after tariffs kicked in. This marked a sharp reversal for a platform that had been growing quickly. Experts and Bain & Company analysts noted this was more than sticker shock; it was a loss of trust that wiped out customer loyalty as the platform’s value proposition vanished almost overnight.
Shein Holds On a Bit Longer
Shein also lost users but fared better than Temu. Sensor Tower and CNBC show Shein’s U.S. daily active users dropped 25%, much less than Temu’s 58% fall. Yet, analysis from Bain & Company via Reuters and IndexBox shows Shein increased per-user spending despite fewer visits. This points to a more loyal, resilient customer base facing tariffs and price hikes. While the damage is clear, Shein’s numbers suggest it may survive tougher conditions better.
Vanishing Ads, Vanishing Awareness
Sensor Tower data shows Temu and Shein slashed U.S. ad spending sharply as tariffs hit, Temu by 31% and Shein by 19% from March 31 to April 13. Temu stopped all U.S. Google Shopping ads by April 9, causing a steep drop in digital visibility and app rankings. Shein followed soon after. Their sudden disappearance from TikTok, Instagram, and YouTube shrank brand awareness, leaving space for domestic rivals to gain attention and customers.
Who’s Winning in Their Place
As Temu and Shein fade, Amazon and Walmart rise. Industry forecasts show Amazon now holds nearly 48% of U.S. retail share, with Walmart still a powerful competitor. Dollar Tree’s CEO Mike Creedon told investors the chain added 2.6 million new customers in Q1 2025, many from higher-income households. This shift reflects shoppers moving away from digital discounters back to traditional, value-focused retailers. American retail giants are reclaiming ground and building new loyalty.
Temu Pulls the Plug on Imports
In May, Temu stopped all direct shipments from China to the U.S., as confirmed by Newsweek and the BBC. Now, U.S. customers only receive goods fulfilled from within the country. This change ends Temu’s signature China-to-consumer air parcel model, a core part of its growth. The shift signals a fundamental transformation in Temu’s U.S. business approach, forced by tariffs and new trade realities.
Warehouses Over Airplanes
Temu’s new model partners with warehouse providers WINIT and Easy Export for U.S. storage and fulfillment. Marketplace Pulse confirms this bulk shipping to domestic warehouses replaces air freight direct to consumers. This approach is slower, more expensive, and more like the logistics used by Amazon or Walmart. Temu’s old fast-delivery advantage has disappeared, forcing it to rebuild its supply chain from the ground up.
Temu Turns to the Rest of the World
Q2 2025 data reveals Temu’s global pivot. Out of 416 million monthly active users, the majority now live outside the U.S. Growth is driven by markets in Latin America, Europe, and other regions with fewer trade restrictions. As tariffs choke U.S. prospects, Temu’s survival depends on expanding internationally. This “internationalization” is backed by user data and official company statements, marking a major shift away from its once U.S.-focused strategy.
Shein Raises Prices Across the Board
Shein’s strategy? Higher prices. Retail Gazette says a 10-pack of dishcloths jumped from $1.28 to $6.10, a 377% increase. Index Box found 51% average increases in beauty and health categories and 30% in home goods. Shein warned users back in February that higher “operating expenses” were coming. These price hikes weren’t a surprise, but they’re still hitting shoppers hard and changing how the platform is perceived.
Slower Change, But Big Moves
Unlike Temu, Shein hasn’t fully turned its model upside down. But it is expanding its U.S. footprint. Just Style reports that Shein opened a Seattle office, and has facilities in L.A., Philly, San Diego, and more. The Real Deal says it’s building a massive 1.8 million-square-foot warehouse in Cherry Valley, California. CNBC reports it’s also adding a major hub in Vietnam. These moves aren’t immediate fixes, but they’re signs of a long-term shift.
Fewer Customers, But More Spending
Shein is losing traffic, but it’s keeping loyal, high-spending users. Business of Apps says Shein shoppers spend $100 a month on women’s clothes, well above the U.S. average. Sacra reported that Shein doubled its profit in 2023, hitting $1.6 billion. That’s a 5% margin. Even with fewer users, Shein’s strong per-customer numbers have helped it stay profitable. For now, that’s buying time as they adapt to the new rules.
A Small Tariff Break, But Not Enough
In May, the U.S. and China reached a short-term deal to ease trade tensions. India Today says U.S. tariffs dropped from 145% to 30%, and The National confirmed Chinese tariffs fell from 125% to 10%. Axios noted that the de minimis rule wasn’t included at first, but later dropped from 120% to 54%. It’s some relief, but nowhere near the zero-tariff environment that fueled Temu and Shein’s rise.
Price Hikes Reach Beyond Apps
The cost increases aren’t just on fast fashion. AARP says U.S. households could pay up to $10.9 billion more for appliances in 2025. Epic Economist warned of 60% price jumps in 15 everyday categories. Finger Lakes 1 reported that gas prices remained high —$3.78 per gallon in early May. These tariff changes affect far more than online shopping. They’re driving up prices across the board, from groceries to home essentials.
U.S. Retailers Are Stepping In
The big winners are right here at home. Retail Dive says Dollar Tree gained 2.6 million new customers, many earning over $100,000 a year. PYMNTS found Amazon holds 10% of all U.S. retail sales. Walmart controls 19% of food and beverage spending. Morning Consult reports that Amazon hasn’t seen demand drop at all. American chains now have a shot at long-term growth, if they can deliver both value and reliability.
What’s Next for Temu and Shein?
Temu and Shein aren’t going away, but they’re not invincible anymore. CNBC experts say both platforms are “agile” and have backup plans. Business Insider reports they’re racing to adapt through local warehousing and international expansion. But the truth is clear: their era of duty-free dominance is over. Whether they can build sustainable, long-term businesses under new rules remains to be seen. For American consumers, the golden age of $3 T-shirts may be over, but more balanced competition could be just beginning.