While the drop so far is only as big as the traditional post-Christmas falloff in spending on these platforms, it reversed the growth trend seen in late January, and has lasted through Feb 9, the latest date for which data is available.
The pullback in spending began a day after Trump said that parcels under US$800 ($1,082.71) from China would no longer be exempt from customs duties, a category that covers the bulk of Shein and Temu’s deliveries to US consumers. While the revocation has yet to be implemented, shoppers may be put off by fears that they’ll be on the hook for extra fees.
Other factors like seasonality, market competition and macroeconomic changes may also be weighing on sales.
See also: Trump’s Vietnam deal shows China tariffs won’t fall much further
The two Chinese online retailers, who have been leveraging the small parcel rule to ship cheap goods to US consumers without paying tariffs, have been accelerating their efforts to mitigate the impact of the fresh US tariffs. Shein is said to ask some of its top apparel suppliers in China to set up new production capacity in Vietnam, while Temu is giving up substantial control of its Chinese supply chain with a so-called “half-custody” framework, Bloomberg News earlier reported.
Trump’s new tariffs on China have been mired in chaos, sparking shipping disruption and price hikes during the past week. After the removal of the “de minimis” rule last week, the US Postal Service at first said it would no longer accept inbound packages from China and Hong Kong, only to reverse its position less than a day later.
The US president on Saturday said that the removal of the duty-free exemption would be delayed until adequate systems are in place to collect tariff revenue.
Last year, companies including Shein and Temu shipped $46 billion worth of small parcels to the US, according to Nomura HoldingsInc.’s estimates.
