Summary
- Shein and Temu are increasing prices due to recent tariffs, affecting their ultra-low cost business model.
- Operating expenses have risen due to new global trade rules and tariffs, impacting cheap goods from China.
- Packages from Shein and Temu entering the US will face high tariffs, prompting a substantial price hike.
With the tariff war taking place, as you might have already noticed, everything is getting a price increase. Now, both Temu and Shein are also seeing a price hike as well.
Popular e-commerce platforms Shein and Temu, known for their ultra-low prices, have announced upcoming price adjustments for their US customers, citing all of the nonsense that’s currently being imposed by the Trump administration. The changes, set to take effect on April 25th, follow the imposition of steep tariffs on Chinese goods and the elimination of the long-standing “de minimis” customs exemption that allowed packages under a certain value to go through customs duty-free and with minimal inspection—which will also mean that even these dirt-cheap packages will also be subject to tariffs.
In separate but similarly worded statements posted on their respective platforms, both companies attributed the need for price adjustments to increased operating expenses stemming from “recent changes in global trade rules and tariffs.” Right now, tariffs on most Chinese goods are set to 145%, and tariffs on a handful of them go up as high as 245%—if the latter rate ever extends to everything, it would constitute a de-facto trade embargo, since it wouldn’t make sense to bring most stuff to the US. But even with the 145% tariff, some stuff in Shein and Temu might still make more sense to buy compared to US alternatives, even if it won’t be dirt-cheap anymore. I’m expecting the upcoming price hike to be substantial, but we’ll have to wait until next week to see the full impact of it.
Even with the impending price hikes, both Shein and Temu have encouraged users to continue buying during this one last week of cheap prices. Temu’s statement assured customers that “we’ve stocked up and stand ready to make sure your orders arrive smoothly during this time,” further adding that “we’re doing everything we can to keep prices low and minimize the impact on you.”
Packages entering the US with said “de minimis” exception amount to up to 4 million parcels every single day, and a lot of them come from e-commerce sites such as Shein, Temu, or AliExpress. So this will certainly have devastating effects on everyone buying from these ultra-cheap websites, which will have their packages subject to the insane tariffs the US government has put in place.
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Be prepared to see a lot more of these headlines in the future.
Shein and Temu rapidly gained market share in the U.S. by offering a wide variety of goods—primarily apparel and accessories in the case of Shein, and a broader range including household items and electronics for Temu—at exceptionally low price points. Those websites’ business models relied heavily on the cost advantages afforded by Chinese manufacturing and, until now, the de minimis rule that allowed for duty-free importation of low-value goods. All you had to pay was the price of the item, plus shipping. The combination of the new tariffs and the end of the de minimis exemption directly challenges the core economics of this approach.
As I said before, I’m expecting these price hikes to be substantial. I wouldn’t be able to tell you the actual profit percentage Shein and Temu make for the stuff they sell, but it’s probably not that high, so some items could easily at least double in value to account for the tariffs. It’s dark times ahead, and cooler heads are not prevailing, so we’re not looking forward to seeing how this whole situation ends.
Source: AP News
