Temu and Shein catch a break as President Trump temporarily reduces tariffs from 145% to just 30%, but the relief may be short-lived for these Chinese e-commerce giants.
At a Glance
- President Trump has temporarily reduced tariffs from 145% to 30% for 90 days as part of new trade negotiations with China
- Direct shipments from China still face high tariffs up to 120% or flat fees of $100 per package (rising to $200 in June)
- Temu and Shein have built US warehouses to mitigate tariff impacts and maintain competitive pricing
- Both companies now have a 90-day window to stock US warehouses at lower tariff rates
- Small American businesses previously hurt by cheap Chinese imports see the broader tariff strategy as beneficial
Temporary Relief for Chinese E-commerce Giants
Chinese e-commerce platforms Temu and Shein have received unexpected good news amid ongoing trade tensions. President Trump has reduced tariffs on bulk Chinese imports from 145% to 30% for a 90-day period as part of new trade negotiations with China. This temporary measure provides both companies a strategic window to adjust their operations while seeking more favorable trade terms. The reduction specifically benefits bulk shipments to US warehouses, which both companies have increasingly relied upon to circumvent direct shipping tariffs.
Despite this reprieve, high tariffs remain on small packages shipped directly from China, which continues to be problematic for their business models. These direct shipments still face tariffs as high as 120% or flat fees of $100 per package, with the fee set to increase to $200 in June. The tariff reduction represents only a partial solution to their trade challenges, as it doesn’t address the recently closed duty-free loophole that had previously allowed packages valued under $800 to avoid tariffs entirely.
Strategic Adaptations to Trade Pressures
Both Temu and Shein have been implementing strategic changes to address these trade challenges. Temu has been constructing US-based warehouses to bypass the high tariffs on direct shipments from China. The platform has also shifted its focus to prominently display items that ship from US warehouses and is actively recruiting more US-based sellers. Similarly, Shein has adapted its approach to maintain competitive pricing despite the challenging trade environment.
“Our whole office was shouting ‘hooray!’ when we read the news,” said Sun Yang, a Temu seller. “Returning to 30% means we have no pressure from price hikes in the foreseeable future.”
The temporary nature of the tariff reduction creates an urgent opportunity for both companies. They can use this 90-day window to replenish their US warehouses with goods at the lower tariff rate, effectively stockpiling inventory before rates potentially increase again. This strategy could help them maintain price stability for consumers in the short term, though the long-term outlook remains uncertain once the relief period ends.
American Small Businesses and the Broader Tariff Impact
While Temu and Shein benefit from the temporary tariff reduction, American small businesses have mixed reactions to the broader trade policies. Some small business owners, like Andy Musliner who owns InRoad Toys in Maryland, have been negatively impacted by the rise of Chinese e-commerce giants. Musliner’s sales plummeted after cheaper knockoff products from Temu became widely available, particularly following Temu’s high-profile Super Bowl commercial that significantly boosted its popularity in the U.S.
“No amount of cost cutting is going to get me to that price point,” said Mr. Musliner, highlighting the impossible competition faced by American manufacturers against ultra-cheap Chinese imports.
Other American retailers, like Sourland Cycles in New Jersey, continue to face challenges with pricing due to tariff-driven cost increases from manufacturers. While the end of the duty-free loophole has been welcomed by some small business owners, broader tariff concerns continue to overshadow any optimism for these American companies. The temporary nature of the current tariff reduction emphasizes that this is merely a brief respite in an ongoing trade situation that continues to evolve.
