Trade Winds Shift: How Trump's Tariff Changes Impact Shein and Temu

The Trump administration's decision to halt tariff-free imports targets fast-fashion retailer Shein and online dollar store Temu. This strategic shift significantly affects Shein owing to its reliance on fast shipments, while Temu diversifies shipping modes. Despite challenges, experts anticipate swift adaptation by these e-commerce giants.

The Trump administration's move to block low-cost imports from entering the U.S. without tariffs is poised to impact fast-fashion retailer Shein more severely than Temu, an online dollar store. Unlike Shein, Temu boasts a broader product range and has proactively revised its shipping strategy to mitigate the effects.

The exponential growth of both platforms in the U.S. market has been significantly supported by the de minimis rule, which exempts imports valued under $800 from duties. However, under the Biden administration, this provision faced scrutiny, prompting changes in operational strategies. Temu, owned by PDD Holdings, quickly adapted by implementing a model similar to Amazon's, leveraging overseas warehouses to store inventory, thus reducing its reliance on this rule.

Compared to Temu, Shein has maintained its focus on speed, relying heavily on air freight to ship its ultra-fast fashion items, although it's gradually diversifying its supply chain by incorporating suppliers from Brazil and Turkey. Despite the challenges posed by new tariffs, analysts remain optimistic about the agility and adaptability of these Chinese e-commerce firms.

(With inputs from agencies.)