Temu and Shein

Chinese-founded e-commerce platforms Temu and Shein have announced price increases for US customers starting 25 April 2025, in response to President Donald Trump’s sweeping tariffs on Chinese imports. The tariffs, which include a 145% duty on goods from China and the closure of the “de minimis” exemption for packages under $800, have significantly raised operating costs for these budget-friendly retailers. Both companies, known for ultra-low prices on fashion, electronics, and household goods, are urging customers to “purchase now at today’s rates” to beat the hikes. Despite the challenges, Temu and Shein are adapting with innovative strategies like US warehousing and diversified sourcing, offering hope for continued affordability and growth in South Africa and beyond.

Trump’s Tariffs Disrupt Low-Cost E-Commerce

On 2 April 2025, President Trump signed an executive order imposing a 145% tariff on Chinese imports, effective 2 May 2025, and eliminating the “de minimis” exemption, which allowed packages valued under $800 to enter the US duty-free. “Due to recent changes in global trade rules and tariffs, our operating expenses have gone up. To keep offering the products you love without compromising on quality, we will be making price adjustments starting April 25, 2025,” Temu and Shein stated in nearly identical customer notices. The tariffs, coupled with a 90% duty or $75 per package (rising to $150 after 1 June), aim to protect American businesses but have sparked concerns about higher consumer costs.

The “de minimis” loophole, used by Temu and Shein to ship over 1.4 billion low-value packages to the US in 2024, has been blamed for undercutting US retailers like Forever 21, which cited competition from these platforms in its recent bankruptcy filing. “The ability for non-U.S. retailers to sell their products at drastically lower prices to U.S. consumers has significantly impacted the Company’s ability to retain its traditional core customer base,” said Forever 21’s co-chief restructuring officer Stephen Coulombe. Trump has also linked the exemption to the inflow of synthetic opioids, framing the tariffs as a national security measure.

Impact on Temu and Shein’s Operations

Temu, owned by China’s PDD Holdings, and Shein, now based in Singapore, have thrived by offering products like $6 dresses and $2 gadgets, shipped directly from Chinese suppliers. The tariffs threaten this model, with experts estimating price hikes of 25-30% and longer delivery times due to stricter customs processes. A Chinese seller named Shi reported a 50% price increase on his Temu arts and crafts products and a 30% drop in orders, with some items temporarily unlisted. US shopper Lorianna Calhoun noted 40 of her 170 Shein wishlist items, including eyelashes and hair products, have vanished from the platform.

South African consumers, who have increasingly embraced Temu and Shein for affordable online shopping, may also feel ripple effects. While Temu launched in South Africa in January 2024 and Shein has grown its local presence through partnerships like Mr Price, the companies’ global supply chains mean higher US costs could influence pricing or availability here. For instance, Shein’s dresses currently range from R100 to R1,500 in South Africa, and Temu offers items as low as R30, but local pricing adjustments remain unconfirmed.

Strategies to Stay Competitive

Temu and Shein are not standing still. “We’ve stocked up and stand ready to make sure your orders arrive smoothly during this time,” Temu said, highlighting its expansion of US-based warehouses to bypass some tariff impacts. Shein, which has diversified production to Brazil, Turkey, and Vietnam, is exploring further sourcing from ASEAN countries to leverage lower tariff rates. However, challenges persist—Vietnamese manufacturers are reportedly slower, with one Chinese factory owner noting, “Here we can finish 1,000 pieces of clothing in one day, there it takes a month.”

Temu is also recruiting Chinese merchants to store inventory in the US, potentially creating jobs but passing some costs to consumers. Both companies are leveraging data-driven inventory management to produce small batches, reducing waste and maintaining affordability. “Even with the tariffs, the products still may be attractively priced,” said Jason Goldberd, chief commerce strategy officer at Publicis Groupe, citing their low manufacturing costs. Shein’s vast supplier network could also position it as a supplier for US retailers like Nike or Zara if direct sales falter.

In South Africa, Temu and Shein are investing in local logistics to ensure fast delivery, with Temu partnering with PostNet and Shein opening a Johannesburg warehouse in 2024. These moves could shield South African shoppers from immediate disruptions, maintaining the platforms’ appeal in a market where e-commerce grew by 20% in 2024, driven by budget-conscious consumers.

Benefits for Local Economies and Consumers

While the tariffs pose challenges, they could benefit South African and US retailers. In South Africa, local fashion brands like Foschini and Ackermans may see reduced competition from ultra-cheap imports, encouraging investment in domestic manufacturing. The tariffs also align with South Africa’s push for localisation under the Retail-Clothing, Textile, Footwear and Leather Masterplan, which aims to create 30,000 jobs by 2030. For US consumers, the policy may encourage sustainable shopping habits, such as buying secondhand, as suggested by ThredUp’s Alon Rotem.

Social media reflects consumer urgency, with South African TikTok users echoing US sentiments by stockpiling orders. Posts like “Temu & Shein to your wallet: ‘It’s not you, it’s tariffs’” capture the mood, yet fans remain loyal, drawn to the platforms’ variety and affordability. “We’re doing everything we can to keep prices low and minimize the impact on you,” Temu reassured, a sentiment echoed by Shein’s commitment to “making fashion accessible for everyone.”

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