Trump's tariffs deliver fatal blow to two of Americans' favorite stores

Daily Mail​

5 days ago

US shoppers once flocked to Shein and Temu. Now, tariffs mean they are no longer in fashion.
The Chinese online retail brands — which had seen seemingly unstoppable growth in recent years — have seen sales plummet over the past two months.
In May, Shein's sales dropped by 10 percent. Temu's fell nearly 20 percent. Both have struggled to recover in the weeks since.
Retail experts point to the April decision by President Donald Trump to close the so-called de minimis loophole, a tax exemption that allowed companies to ship goods under $800 into the US without paying import duties.
Their throttled sales are largely because of President Donald Trump's policies.
In April, the President killed the de minimis loophole, a tax exemption that allowed retailers selling items less than $800 to skirt tariffs on Chinese goods.
Shein and Temu relied heavily on that carveout to flood the US with low-cost goods, including $3 t-shirts, $15 sneakers, even $100 appliances — all shipped straight to shoppers' doors.
But the policy change is straining their pricing advantage.
'Higher prices have deterred shoppers, but the pullback in advertising, particularly by Temu, has also resulted in it dropping off the radar of a lot of consumers,' Neil Saunders, a retail expert at GlobalData, told DailyMail.com.
'The sudden change in fortunes shows that most consumers were not very loyal to either platform; they just liked the low prices.'
Among legacy retailers, those rock-bottom prices were a looming threat. Forever 21 — itself once a fast fashion disruptor — partly blamed Shein and Temu's rise for its latest bankruptcy.
The mall staple shuttered all of its stores earlier this year.
But now, as Shein and Temu stumble, other retailers are picking up steam.
Amazon's women's clothing category grew 26 percent over the last six months.
The e-commerce giant is also leaning into the same fulfillment model that Shein and Temu once dominated — working with China-based third-party sellers to keep prices competitive.
Other beneficiaries of the shake-up include Dollar Tree, Target, Walmart, Five Below, Zara, Asos, Aeropostale, Nordstrom Rack, and even discount retailers like Ollie's Bargain Outlet.
'Customers have migrated in a number of directions,' Saunders added.
'Shein and Temu won't completely disappear from the US, but the days when they were generating extraordinary growth are behind them.'
To stay afloat, Temu is adapting.
The company says it's transitioning to a US-based fulfillment system, working with more domestic sellers to avoid international shipping taxes.
At the same time, both brands are leaning into growth overseas.
Temu's sales in Europe jumped 60 percent in May alone, with France seeing a doubling of purchases. Shein saw a surge in UK and EU markets, too.
Analysts expect both companies to keep shifting their supply chain strategies to regain pricing power in the US. But that won't be easy.
Global trade tensions, especially between the US and China, remain in flux.