MAGA effect: Why Temu, Shein are set to cost higher for US customers?

Temu and Shein will raise prices next week, a ripple effect from President Donald Trump's imposition of tariffs on goods shipped from China

Chinese fast-fashion retailer Shein and e-marketplace Temu are set to raise prices for US customers starting next week, as US President Trump’s sweeping tariffs and import restrictions drive up costs for companies known for their low-cost offerings.

 

Temu and Shein said in separate but nearly identical notices that they will each hike prices beginning April 25 because their operating expenses have gone up due to recent changes in global trade rules and tariffs. Neither provided details about the size of the increases. Shein merchandise currently range between $6 and $91 on its website, while Temu sells them between $2.48 and $210 online.

 

What is the ‘de minimis’ provision?

Imported items worth under $800 were previously exempt from US tariffs under the ‘de minimis’ provision, which enabled foreign e-commerce companies like Temu and Shein to offer inexpensive products to US customers. 

Since entering the US market, Shein and Temu have challenged the hegemony of Western retailers by combining very low prices with extensive influencer marketing campaigns. The 145 per cent tariff Trump imposed on most Chinese-made goods, along with the elimination of customs exemption for items valued below $800 entering the US duty-free, has impacted these platforms’ business strategies.

 

Approximately four million low-value packages, predominantly from China, enter the United States daily under this soon-to-be-terminated provision.  Also read: Shein, Reliance renegotiate partnership as China-US trade tensions grow 

 

E-commerce firms have been the beneficiaries of this widely utilised exemption. Earlier this month, Trump signed an executive order abolishing the ‘de minimis’ provision for products from China and Hong Kong effective May 2, after which they will be subject to the 145 per cent import tax.  Also read: Shein re-enters India market after 5-year ban through Reliance Retail

 

Demise of Forever 21

 

The de minimis exemption has been blamed by critics for severely damaging US businesses, including fashion retailer Forever 21, which has recently liquidated its US stores. Proponents of the exemption warn that American consumers will face higher prices following the elimination of tariff-free shipments. US politicians and business groups have been lobbying for the long-standing exemption, characterising it as a trade loophole that unfairly advantaged low-cost Chinese products and served as a portal for illicit drugs and counterfeits to enter the country.

 

Temu, Shein see US sales surge

 

Temu and Shein experienced sales recoveries in March and April as US consumers stockpiled products like makeup brushes and household appliances ahead of anticipated price increases due to tariffs, according to Bloomberg. Shein registered some of its strongest US sales growth in the previous year, with revenue increasing by 29 per cent in March compared to the same period last year, then further accelerating to 38 per cent during the first 11 days of April. Concurrently, PDD Holdings Inc’s Temu witnessed growth of 46 per cent and 60 per cent during these same periods.