In a surprising move, the United States has reduced tariffs on small parcels from China,China to 30%, Boosting Shein and Temu dropping the rate from a steep 120% to a more manageable 54%, with general tariffs on Chinese imports falling from 145% to 30% for a 90-day period. This decision, outlined in a White House executive order, offers a lifeline to Chinese e-commerce giants like Shein and Temu, which have faced challenges due to recent trade policies. The tariff cut, effective from May 14, 2025, marks a temporary de-escalation in the U.S.-China trade war, giving these companies breathing room to adapt and potentially lower prices for American shoppers.
A Game-Changer for E-Commerce
For years, Shein and Temu have thrived by offering ultra-affordable clothing, accessories, and household goods to U.S. consumers. Their business models relied heavily on the “de minimis” exemption, a rule that allowed packages valued under $800 to enter the U.S. duty-free with minimal inspections. This loophole fueled the rise of fast fashion and bargain shopping, with Shein and Temu accounting for a significant share of low-value shipments from China. However, in April 2025, the Trump administration closed this exemption, imposing hefty tariffs that disrupted their operations and led to price hikes for customers.
The recent tariff reduction comes as part of a broader agreement between Washington and Beijing to ease trade tensions for 90 days. While the de minimis exemption has not been reinstated, the lower tariffs provide Shein and Temu with an opportunity to restock U.S. warehouses and stabilize their supply chains. Industry experts predict that this move could help these companies resume bulk shipments, potentially reducing costs and easing the price burden on consumers.
How Tariffs Impacted Shein and Temu
When the de minimis exemption ended, Shein and Temu faced significant challenges. The initial 120% tariff on low-value packages meant that a $10 T-shirt could jump to $22, while a $200 luggage set could cost $300 if the duties were passed directly to consumers. Shein responded by raising prices across categories, with women’s clothing seeing an average increase of 43%, beauty products 51%, and home goods 30%, according to a Washington Post analysis. Temu, on the other hand, halted direct shipments from China, relying instead on U.S.-based warehouses to fulfill orders.
These changes led to double-digit sales declines for both companies in the weeks following the tariff hikes, as reported by Bloomberg. American shoppers, accustomed to rock-bottom prices, hesitated to pay more, and some turned to competitors like Amazon’s discount platform, Amazon Haul. The tariff-driven price increases also sparked debates about the sustainability of fast fashion, with critics arguing that higher costs could push consumers toward more environmentally friendly alternatives.
A Temporary Reprieve
The new tariff rates—54% for low-value packages and 30% for general imports—offer a window of opportunity for Shein and Temu to adapt. Supply chain experts suggest that both companies will likely shift from individual air shipments to bulk container shipping to take advantage of the lower tariffs. This strategy could help them replenish U.S. inventories at a reduced cost, potentially allowing them to roll back some price increases.
“Shein and Temu are likely to use this 90-day reprieve to bring in bulk shipments and restock their U.S. warehouses,” said Hugo Pakula, a customs expert and CEO of trade automation platform Tru Identity. “For low-value items, adding a 30% tariff might still keep prices competitive compared to domestic retailers like Amazon or Walmart.”
Shein, in particular, has already taken steps to diversify its supply chain. The company has begun building manufacturing facilities in countries like Turkey, Mexico, Brazil, and Vietnam to reduce its reliance on China. Temu, meanwhile, is recruiting more U.S.-based sellers and expanding its local fulfillment model to avoid import duties altogether. These strategic shifts could help both companies navigate future tariff changes and maintain their appeal to budget-conscious shoppers.
What This Means for American Shoppers
For U.S. consumers, the tariff reduction could bring some relief after months of rising prices. Shoppers who rely on Shein and Temu for affordable fashion and household goods may see prices stabilize or even decrease slightly as the companies restock at lower costs. However, experts caution that the 54% tariff on low-value packages remains significant, and the end of the de minimis exemption signals that the “golden age” of ultra-cheap Chinese goods may be over.
“If you’re buying a $7.99 toilet brush from Temu and it now costs $12.99, it’s still a bargain for many,” said Brendan Heegan, founder of shipping logistics firm Boxzooka. “But the days of dirt-cheap imports are fading, and consumers may need to adjust their expectations.”
The tariff changes also highlight the broader impact of trade policies on everyday purchases. While Shein and Temu have been criticized for their fast-fashion practices and environmental footprint, their low prices have been a boon for millions of Americans, particularly younger shoppers and those on tight budgets. The temporary tariff cut could help preserve some of that affordability, at least for the next few months.
The Bigger Picture: Trade and Sustainability
The U.S.-China trade agreement, reached after talks in Geneva, reduces tariffs on Chinese imports to 30% and duties on U.S. goods by China to 10% for 90 days. This truce follows a period of tit-for-tat tariffs that raised costs for businesses and consumers on both sides. The decision to lower tariffs has also eased recession fears, with Goldman Sachs economists cutting the odds of a U.S. recession in 2025 to 35% and forecasting 1% economic growth, double their previous estimate.
However, the tariff changes have sparked mixed reactions. Some American small businesses, which struggled to compete with Shein and Temu’s low prices, welcomed the end of the de minimis exemption. Others, including a group of five small businesses, have sued the Trump administration, arguing that the tariffs overstepped presidential authority and caused financial strain.
Environmental advocates, meanwhile, see the tariff hikes as a double-edged sword. While higher prices could slow the fast-fashion cycle and reduce waste, Shein and Temu’s shift to U.S. warehouses and bulk shipping may increase their carbon footprint. “The chaos in the global fashion industry could harm sustainability initiatives,” noted an ABC Australia report, pointing to the challenges of balancing affordability, trade, and environmental goals.
Looking Ahead
As the 90-day tariff reduction period unfolds, Shein and Temu will need to act quickly to capitalize on the lower rates. Restocking warehouses, optimizing supply chains, and maintaining competitive prices will be critical to retaining their U.S. customer base. At the same time, both companies face growing scrutiny over labor practices, environmental impact, and their reliance on low-cost production.
For American shoppers, the tariff cut offers a glimmer of hope for more affordable purchases, but the long-term outlook remains uncertain. If the de minimis exemption stays closed and tariffs rise again after the 90-day period, Shein and Temu may need to further rethink their business models. For now, the tariff reduction provides a much-needed pause in the trade war, giving e-commerce giants and consumers alike a chance to adapt to a changing landscape.
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