SHEIN and Temu See Massive Drop in Daily US Users: What Trump's Tariff Loopholes Mean for Them

SHEIN and Temu, two of the most prominent Chinese e-commerce platforms operating in the US, have recently experienced a sharp decline in daily active users, signalling potential trouble ahead in one of their most lucrative markets. This downturn comes as former President Donald Trump reemerges on the political stage, with a renewed focus on tariffs and trade policies that could reshape the playing field for foreign retailers.

What Caused the User Dip?

According to data from Sensor Tower, Temu experienced a 58% decline in daily active users in the US during May 2025, following the closure of the 'de minimis' tariff exemption on May 2.

This exemption had previously allowed Chinese retailers to ship low-value goods to US consumers without incurring tariffs, a benefit that Temu and Shein had utilised extensively. The policy change prompted Temu to reduce its US advertising spend and reevaluate its fulfilment strategies, leading to decreased user engagement and revenue growth.

In contrast, SHEIN increased average spending per customer despite the new tariffs. Analysts, including Morgan Stanley's Simeon Gutman, noted Temu's declining competitiveness in the US market.

Looking at Both Shares of the Online Shopping Scene

As of 2024, Temu and SHEIN have solidified their positions as leading Chinese e-commerce platforms in the US market. A Statista survey conducted in April 2024 revealed that nearly 60% of US online shoppers had purchased from Temu, while just over 40% had shopped on SHEIN.

Temu's rapid ascent is further highlighted by its 17% share in the US discount store category as of November 2023, trailing only behind Dollar General and Dollar Tree. In contrast, SHEIN has established a strong foothold in the US apparel and footwear sector, ranking as the fourth-largest brand with a 2% market share in 2024.

Despite their success, both platforms face challenges due to recent US trade policy changes, including eliminating the de minimis tariff exemption, which could impact their pricing strategies and market dynamics.

Controversies in the US

Both platforms have faced mounting controversies in the US over the past year, drawing scrutiny from lawmakers, regulators, and consumers. SHEIN has been accused of sourcing cotton from China's Xinjiang region, raising concerns about forced labour, and has faced multiple lawsuits from independent designers and major brands like Levi Strauss and Ralph Lauren for alleged intellectual property theft.

In 2023, US lawmakers urged the Securities and Exchange Commission to halt SHEIN's initial public offering until the company could verify that it does not use forced labour for its products. Temu, owned by PDD Holdings, has been criticised for potential data privacy violations, with class-action lawsuits filed in Illinois and New York regarding its handling of user data.

In June 2024, the Arkansas Attorney General filed a lawsuit against Temu, alleging malware and deceptive trade practices. The two companies have also engaged in legal battles against each other, with Temu accusing SHEIN of 'mafia-style intimidation' of suppliers and anti-competitive practices. At the same time, SHEIN has sued Temu for alleged copyright infringements.

A Big Blow to US Market Dominance

The sharp decline in daily active users (DAUs) is a critical blow to SHEIN and Temu, threatening their rapid growth and long-term viability in the American market. Temu's drop reflects growing consumer hesitation amid higher prices, longer delivery times, and a weakened value proposition following tariff enforcement.

Its reliance on aggressive advertising and ultra-low pricing has proven fragile under shifting trade conditions. While more resilient due to its established user base and product variety, SHEIN is not immune—facing rising costs and heightened regulatory scrutiny.

As both companies navigate reduced engagement and increased operational pressures, their future in the US hinges on adapting to new trade realities, rebuilding user trust, and redefining their value to a more cautious and scrutinising consumer base.