Is there hope for Temu and Shein in the wake of a trade war between the United States and China? The trade dispute between the world’s two largest economies has impacted both companies, but particularly Temu, which saw its daily online users in the U.S. drop by 58%, according to Reuters.
Shein has also seen sales decline, but not as much as Temu. That’s because Shein has reportedly been able to increase the amount each customer spends per item compared to last year.
De minimis impact
Both companies recently shifted their marketing strategies as they braced for a crucial exemption for low-cost items to be eliminated. The loophole, known as the de minimis exemption, allowed for items worth $800 or less to be shipped to the United States duty-free. However, an executive order from President Donald Trump ended the exemption on May 2.
As a result, Shein and Temu began selling off items in their U.S. warehouses. Once those ran out, the plan was to move on to other customer bases around the world.
Reason for hope?
But now, there’s a proverbial light at the end of the tunnel for Temu and Shein as a recent U.S. federal court order vacated Trump’s executive order on tariffs, which could potentially breathe life back into the de minimis exemption, according to the Wall Street Journal.
Trade attorney Michael Lowell told The Journal, “It’s pretty clear that Trump’s revocation of de minimis was also vacated as part of the executive order that was vacated.” Lowell added, “The exemption should be back in place.”
In April, Trump announced his intention to dismantle the de minimis exemption, citing a surge in the use of the loophole in recent years, as Straight Arrow News previously reported. Trump justified his decision by saying discount retailers like Shein and Temu, which were becoming increasingly popular with U.S. consumers, had an unfair advantage over domestic firms.
What’s next?
Whether the court order will revive Temu and Shein’s stake in the American market remains to be seen. The companies have experienced a number of setbacks recently, including the emergence of a new rival in Amazon Haul and Temu dropping tens of millions of dollars on Super Bowl ads to entice a now-declining U.S.-customer base.
Last month, before the latest court ruling, China and the U.S. achieved something of a breakthrough in their trade negotiations. The Trump administration agreed to slash the de minimis tariff for low-cost products imported from China. The move was in concert with the president’s executive order on May 12, and came as both nations agreed to reduce tariffs on each other.
