Shein and Temu Warn of Price Increases Amid U.S. Tariffs
Shein and Temu announce upcoming price hikes for U.S. customers due to increased tariffs on Chinese imports, effective April 25.
Overview
Chinese online retailers Shein and Temu are set to raise their prices starting April 25, due to new tariffs imposed by President Trump on Chinese imports. Tax rates could reach up to 245%. The companies, benefiting from a previously duty-free exemption on low-value imports, are expected to increase operational expenses as the exemption is canceled on May 2. Both companies have advised customers to shop before the price adjustments take effect. This move reflects their struggles amid rising advertising costs and competition for U.S. consumers.
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Analysis
- Shein and Temu are warning US customers about impending price increases due to new tariffs imposed by Donald Trump on Chinese imports, which could reach up to 245%.
- The removal of the 'de minimis' exemption, allowing duty-free shipments under $800, is significantly impacting their pricing strategies and overall business model, resulting in reduced ad spending and lower app rankings.
- Despite the tariffs, experts suggest that Shein and Temu may still be competitive due to their established customer base and lower prices compared to rivals.
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FAQ
Shein and Temu are raising their prices due to new U.S. tariffs imposed on Chinese imports and the cancellation of the 'de minimis' exemption that allowed duty-free entry for merchandise priced below $800, increasing their operating expenses.
The 'de minimis' exemption allowed merchandise valued under $800 to enter the U.S. tax-free, benefiting Shein and Temu since most of their shipments fall under this threshold. Its cancellation on May 2, 2025, means these imports will now face tariffs, increasing costs for these companies.
President Trump imposed a 145% tariff on goods from China, including a 120% tax on small parcels under $800 from China, Hong Kong, and Macau, as part of a crackdown on trade loopholes, which directly affects Shein and Temu.
Temu is raising prices, encouraging suppliers to store inventory in the U.S., and restructuring supply chain management with a 'half-custody' policy where factories ship goods in bulk to U.S. warehouses. Shein has attempted to move production out of China but faced opposition from China's Ministry of Commerce.
Both companies have advised U.S. customers to shop before April 25, 2025, to take advantage of current lower prices before the price adjustments take effect due to increased tariffs and operating costs.
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