Temu Slashes U.S. Ad Spending, Shein to Raise Prices Amid Trump’s Tariff

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Temu Slashes U.S. Ad Spending, Shein to Raise Prices Amid Trump’s Tariff Crackdown

Washington, D.C. – Temu, the Chinese e-commerce platform that skyrocketed to prominence in the U.S. with its flashy Super Bowl ad proclaiming “Shop like a billionaire,” is drastically cutting its American advertising budget in response to President Donald Trump’s aggressive new tariffs on Chinese imports.

Alongside its rival Shein, Temu has also confirmed plans to raise prices starting April 25, 2025, as both companies confront a seismic shift in their ultra-low-cost business models. The tariffs, which include a 145% duty on Chinese goods and the elimination of the “de minimis” exemption for packages valued under $800, threaten to reshape the landscape of U.S. online retail.

The Trump administration’s trade policies, announced earlier this month, impose a 90% tariff on low-value shipments effective May 2, escalating to $150 per item after June 1. These measures target the de minimis loophole, which previously allowed Temu and Shein to ship inexpensive goods—such as $8 dresses and $14 household items—directly to U.S. consumers without duties. This exemption fueled the companies’ meteoric rise, with Temu and Shein capturing 17% of the U.S. discount retail market in 2023, according to a Congressional Research Service report. Chinese exports of low-value packages surged to $66 billion that year, up from just $5.3 billion in 2018.

Temu’s marketing blitz, which leaned heavily on Meta platforms, Google Shopping, and television campaigns, has been a key driver of its success. The company’s app briefly outranked Instagram, WhatsApp, and Snapchat on the U.S. Apple App Store just 17 days after its 2022 launch. However, the tariffs have forced a retreat. Data from SimilarWeb shows a 77% drop in Temu’s paid traffic—including search, display, and social media ads—since April 11, 2025. Sensor Tower reports a 31% reduction in Temu’s daily U.S. ad spend on platforms like Facebook, Instagram, TikTok, and YouTube in the two weeks prior to April 13, compared to the previous month. Shein has followed suit, cutting its U.S. ad spend by 19% over the same period.

The impact is evident in the companies’ declining visibility. Temu’s U.S. Apple App Store ranking has slipped to 75th, down from a consistent top-five position over the past two years, while Shein’s ranking has fallen to 58th from 15th last month. Meanwhile, competitors like DHgate and Alibaba’s Taobao have gained ground, climbing to No. 2 and No. 7, respectively, fueled by viral social media promotions.

In nearly identical statements posted on their websites, Temu and Shein attributed the price hikes to “recent changes in global trade rules and tariffs.” Temu urged customers to “purchase now at today’s rates” to avoid the increases, while Shein emphasized its commitment to “making fashion accessible.” Neither company specified the scale of the price adjustments, but industry experts predict significant increases given the 145% tariffs and the loss of the de minimis exemption. Sheng Lu, a professor at the University of Delaware, noted that the companies’ heavy reliance on Chinese manufacturing leaves them vulnerable, as they have yet to fully diversify sourcing to countries like Vietnam or Bangladesh, which face lower tariffs.

The tariffs have sparked a polarized response. Supporters, including Rep. Mike Gallagher (R-WI), argue that the de minimis loophole gave Temu and Shein an unfair edge over American retailers. “These companies built their empires on exploiting trade rules,” Gallagher said. “Closing this loophole levels the playing field and strengthens national security.” However, critics warn of unintended consequences.

The Cato Institute contends that the policy effectively raises taxes on U.S. consumers and could clog supply chains. The U.S. Postal Service briefly halted inbound parcels from China and Hong Kong on April 15, citing tariff-related disruptions, before resuming operations.

American retailers, already struggling to compete, have felt the ripple effects. Forever 21, which began liquidating its stores last month, blamed Temu and Shein’s rock-bottom prices for eroding its customer base. “Foreign competitors’ pricing made it nearly impossible to retain our core shoppers,” said Forever 21’s co-chief restructuring officer.

Meanwhile, U.S. consumers are bracing for higher costs. Social media platforms like TikTok and Reddit are abuzz with complaints, with some users stockpiling orders before the price hikes. Chicago-based TikTok influencer Tamika Johnson, with 213,000 followers, warned of potential delivery delays and urged her audience to “stock up now.”

Looking ahead, Temu and Shein may pivot to strategies like increasing U.S. warehousing or sourcing from alternative countries. However, such moves could disrupt their fast-fashion model, which relies on China’s rapid production and low-cost labor.

Alison Layfield of ePost Global cautioned that shifting to Vietnam could slow shipping times and raise costs, as Vietnamese manufacturers lag behind China’s efficiency. “Their model is brilliant, but relocating it will create challenges,” she said.

As the U.S.-China trade war intensifies, the future of Temu and Shein hangs in the balance. While some analysts believe their low prices will still attract budget-conscious shoppers post-hike, others warn that losing their cost advantage could cede ground to competitors. For now, American consumers face the prospect of pricier goods, and the once-unstoppable ascent of Temu and Shein is at a critical crossroads.

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