Camilla Jessen
Chinese e-commerce giants Shein and Temu face a sharp drop in US users and ad spend as tariffs bite.
The explosive US growth of Chinese e-commerce platforms Shein and Temu is losing steam.
New data reveals a dramatic fall in demand following fresh import tariffs and tightened trade rules introduced by President Donald Trump, pushing the two online retail titans to turn their attention to other markets.
Tariffs Take a Toll
According to CNBC and Digi24, daily active users (DAUs) for Temu dropped 52% in the US during May compared to March, while Shein saw a 25% decline over the same period.
The downturn coincides with Trump’s reimposition of steep tariffs on Chinese imports and the cancellation of the “de minimis” loophole, which had allowed duty-free shipping on low-value goods.
Both apps also fell in popularity.
Temu, once a top-three app in the US, slid to 132nd in Apple’s App Store rankings.
Shein dropped to 60th from its previous top 10 status.
Neither company responded to CNBC’s requests for comment.
Advertising Budgets Slashed
The user drop-off is matched by a sharp pullback in US marketing spend.
In May, Temu cut its advertising budget by a staggering 95% year-over-year, while Shein slashed its own by 70%, according to Sensor Tower data.
The decline began as early as April, with reductions of 40% for Temu and 65% for Shein from the prior year.
Sensor Tower VP Seema Shah confirmed the trend, highlighting the rapid contraction in both user engagement and ad budgets: “There’s been a clear shift in focus away from the US.”
In response to the trade crackdown, both companies have moved away from their “drop shipping” model, which enabled direct delivery from Chinese sellers to US buyers.
Instead, they’re building local infrastructure. Temu, for instance, has begun establishing warehouse networks in the US to try to minimize import-related costs.
Still, the structural changes appear insufficient to counter the effects of political pressure and declining user interest.
New Ground in Europe
With the US looking increasingly unwelcoming, Shein and Temu are pivoting aggressively to Europe, Latin America, and South America.
Temu’s parent company, PDD Holdings, has already acknowledged missing its Q1 2025 financial targets and blamed the tariffs for increased seller costs.
But there’s a silver lining: HSBC reports that 90% of Temu’s 405 million global users now come from outside the US, driven by its expansion in emerging markets.
Rui Ma, an expert on China tech and e-commerce trends, summed it up: “Many Chinese platforms are redirecting their efforts to other markets, such as Europe.”