Temu and Shein Impacted as U.S. Ends “De Minimis” Exemption

American consumers have begun to reduce their purchases on Temu and Shein, two leading Chinese e-commerce platforms, in anticipation of the impending termination of the U.S. “de minimis” tax exemption for low-value parcels, scheduled to end on August 29.

In May, President Donald Trump signed an executive order abolishing the duty exemption for parcels valued at USD 800 or less, with the measure taking effect on September 1. The directive aims to curb tax avoidance and prevent the shipment of prohibited goods into the United States.

For years, Shein and Temu capitalized on the de minimis rule to ship products directly from China to U.S. consumers, thereby avoiding import tariffs and maintaining exceptionally low prices—an advantage that allowed them to compete aggressively against retailers such as Amazon and Walmart.

Associate Professor Yao Jin of the University of Miami observed that ending the de minimis exemption represents “a significant victory for companies like Amazon and Walmart,” which benefit from extensive domestic logistics networks and warehousing infrastructure.

However, eMarketer analyst Sky Canaves noted that “other e-commerce platforms are also grappling with the broad tariffs imposed by the White House on imported goods,” underscoring that the tariff changes affect the entire industry.

According to research firm Consumer Edge, transaction volumes on Temu and Shein in July declined by 28% and 14% year-over-year, respectively.

Michael Gunther, an analyst at Consumer Edge, characterized the end of the de minimis exemption as “a direct threat to the unsustainable business models of Temu and Shein.”

Despite having attracted a substantial user base in the United States, both platforms are seeing waning engagement: July app downloads for Temu and Shein fell 65% and 25% year-over-year, respectively.

Advertising expenditure has also been scaled back, with Temu cutting its July ad budget by 90% and Shein reducing its spend by double-digit percentages. Multiple indicators suggest that both companies are reallocating marketing resources toward markets such as Europe and Japan.

In the budget-fashion segment, Shein continues to command a strong position in the U.S. market and appears less vulnerable to the policy change.

Yao Jin added that Shein’s true competitive advantage resides upstream, where its rapid delivery capabilities make it unlikely to lose significant market share in the low-cost fashion category.