Caught At The Sharp End Of Tariffs, Shein And Temu Warn Of Price Hikes

Tariffs, sales surges, price hikes, slashed social media ad spend and the go-ahead for a long-awaited IPO amid trade chaos – it’s just another seven days in Shein world.

The fast fashion retailer, along with fellow Chinese retail phenomenon Temu, have been caught in the maelstrom of President Trump’s hefty tariffs on Chinese imports and have warned their band of loyal U.S. customers that they will face imminent price increases.

Both companies will be hit by the new import levies, which will mean taxes of up to 145% being applied to Chinese products and specifically they will also be impacted by President Trump’s cancellation of the so-called ‘de minimis’ exemption. Under that rule shipments worth less than $800 could be imported duty-free and this loophole was crucial in enabling both to send low-cost online purchases direct to the customer without incurring additional levies. It will be removed from May 2.

Under Trump’s original plans, previously exempt packages were due to be hit with a tariff rate of 30% or $25 per item, rising to $50 an item by June 1. However, after China responded with tit-for-tat tariffs on American goods, Trump hit back by tripling those rates to 90% or $75 per item, rising to $150 on June 1.

“Due to recent changes in global trade rules and tariffs, our operating expenses have gone up,” Shein’s customer notice said in its response, having previously called for cool heads amid the escalating trade stand-off.

No such luck incoming on that one.

“To keep offering the products you love without compromising on quality, we will be making price adjustments starting 25 April 2025. We’re doing everything we can to keep prices low and minimise the impact on you,” the company added.

Shein And Temu Sales Soar

On the run-up to the levies, Temu and Shein saw their sales rebound in March and April as U.S. shoppers rushed to stockpile products and as a result Shein has recorded some of its best North American sales growth in the past 12 months as revenue jumped 29% in March compared with a year prior and then accelerated further to 38% over the first 11 days of April.

Meantime, Temu saw growth of 46% and 60% over the same periods, according to Bloomberg Second Measure, which analyzes credit and debit card data.

The pair have also responded to the upcoming tariffs by slamming the brakes on U.S. social media advertising.

Temu’s daily average U.S. ad spend on Facebook, Instagram, TikTok, Snap, X and YouTube declined by a collective average of 31% in the two weeks from March thru April 13 compared with the previous 30 days, according to the digital marketing company Sensor Tower. Likewise, Shein’s daily average U.S. ad spend on Facebook, Instagram, TikTok, YouTube and Pinterest fell a collective average of 19% over the same period.

Shein IPO: What Next?

Somewhat ironically, after a seemingly never ending process to float on either the New York or London stock exchanges, Shein has now apparently secured approval from Britain’s Financial Conduct Authority (FCA) for its planned initial public offering in the U.K., according to reports.

But while the FCA’s approval marks a significant step forward in the company’s pursuit of a London listing, the retail giant must now weigh up whether a flotation during the most vicious trade spat in years with China’s biggest trading partner is really the time to maximize value.

It’s been a long wait to secure a listing but unless Shein and Temu can keep their prices low enough to still undercut rivals, it seems inevitable that sales will be hit among thrifty Gen z and Gen A shoppers.

But after a breathless past seven days for Shein and Temu, an awful lot could yet happen by this time next week.