The Impact of Regulatory Changes on Temu and Shein
Temu and Shein, once thriving due to a regulatory loophole in the U.S., are facing significant challenges after the removal of the de minimis exemption. This change, effective May 2, 2025, imposes tariffs on low-cost imports from China, forcing these companies to raise prices and cut advertising budgets. As a result, both brands have seen a drastic reduction in their digital ad spending, leading to their disappearance from major platforms like Google Shopping.
The new tariffs not only threaten the business models of Temu and Shein but also impact major tech companies like Meta and Snap, which relied heavily on advertising revenue from these brands. With the end of the de minimis exemption, these companies must adapt to a new competitive landscape, facing higher operational costs and diminished market presence.
This shift highlights the fragility of business models dependent on regulatory advantages and signals a broader change in the digital commerce landscape, as U.S. policies aim to level the playing field for domestic and foreign companies alike.