Buy goods from Temu, Shein? Get ready to pay more
What's the story
Chinese fast-fashion giants Temu and Shein have warned their US customers about imminent price hikes. This is because of the steep tariffs on Chinese imports imposed by US President Donald Trump.
The new import levies will impose duties as high as 145% on Chinese goods.
Trump's scrapping of the "de minimis" exemption, which permitted duty-free imports for shipments worth less than $800, will also affect these companies.
Company response
Shein announces price adjustments
One of the affected retailers, Shein, has acknowledged the impact of these changes.
"Due to recent changes in global trade rules and tariffs, our operating expenses have gone up," the company said.
To maintain quality while managing these increased costs, Shein announced that it will start adjusting prices from April 25.
The company assured customers that it is doing everything possible to keep prices low and minimize their impact.
Tariff escalation
Tariff rates on previously exempt packages increased
Under Trump's original plans, packages that were previously exempt from tariffs were to be charged a $25 per item rate. This was set to increase to $50 per item by June 1.
However, after China retaliated with tariffs last week, Trump tripled the rates for these packages to $75 per item, and has plans to increase it further to $150 on June 1.
Advertising cuts
Retailers cut US social media advertising
In response to the new tariffs, Temu and Shein have cut back on their US social media advertising spending.
Notably, after the US tariffs were imposed, Temu's daily average ad spend on Facebook, Instagram, TikTok, Snap, X and YouTube dropped by an average of 31% over two weeks.
Shein also cut its daily average ad spend across major platforms by 19% in the same period.
Impact on revenue
Retailers adjust to new tariffs
Both Temu and Shein have started recalibrating their strategies in light of the tariffs. They have started cutting back on advertising and will increase prices in the US by the end of April.
This change could affect revenues at companies like Meta and Alphabet, which made a large chunk of their revenue from China-based advertisers in 2023.