For years, ultra-low-cost parcels from China reached U.S. consumers effortlessly, enabling Shein and Temu to scale at unprecedented speed. But in 2025, the United States effectively pressed the delete key on that model.
With the removal of the de minimis exemption for packages originating from Mainland China and Hong Kong—replaced by duties of 30% of value or a flat $25 per parcel, along with additional fees—the two giants are confronting their most disruptive moment yet.
This change strikes at the foundation of their business:
low cost, direct shipping, and tax-free entry.
A Market Shift Years in the Making
In FY2024, over 1.36 billion parcels entered the United States via de minimis, with approximately 73% originating from China. This policy allowed goods under $800 to enter duty-free. Temu capitalized on this rule aggressively—nearly 30% of its daily shipments in the U.S. once fell within this category.
The removal of de minimis dismantles the economics behind “cheap, fast, direct-from-China” shipping. Sellers report overall fulfillment costs rising two to three times, driven by tariffs, logistics restructuring and rising warehousing requirements.
Immediate Market Impact: Demand Drops and Apps Fall in Ranking
The effect on U.S. consumers was immediate:
44% of users reduced their order frequency on cross-border platforms (Statista).
Temu’s U.S. DAU dropped ~52% from March to May 2025; Shein fell ~25% (CNBC).
30-day MAU declined ~30% for Temu and ~12% for Shein.
App Store ranking:
- Temu fell from Top 3 in 2024 to #132 in May 2025.
Shein dropped from the Top 10 to around #60.
Temu even suspended many China-origin products, marking them “non-local” and disabling checkout. This confirms what many analysts have argued for years:
The de minimis pathway was not a side advantage—it was the platform’s core operating pillar.
Still Growing—But Not Because of the U.S.
Despite turbulence in their largest foreign market, both companies continued to post strong global numbers in 1H 2025:
Shein GMV: approx. $27B, up 15–20% YoY
Temu GMV: approx. $35B, up ~50% YoY
However, the growth came largely from outside the U.S. Roughly 90% of Temu's MAU is now sourced from international (non-U.S.) markets.
The U.S., once a high-growth region, is now a drag on momentum.
The Economic Cost: Up to $180B in Market Disruption
The new rules reverberate far beyond Shein and Temu.
Statista estimates that the U.S. e-commerce sector could lose up to $180 billion in 2025, accounting for:
reduced import volumes
- lower consumer spending
- higher fulfillment and warehousing costs
- supply chain reconfiguration
- Morning Consult reports that while Gen Z’s perception of Temu’s “value” has slightly recovered, sentiment among Millennials and lower-income groups has weakened. The “occasional bargain shopper” cohort is shrinking—precisely the group that fueled Temu’s explosive rise.
This consumer shift has benefited local retailers such as Amazon, Walmart, and discount chains, as price-sensitive users move toward domestic alternatives.
A Fundamental Shift in Cross-Border Logistics
The old model—direct shipping + micro-inventory + small parcels—is no longer viable at scale.
The new environment favors:
bulk importation
- U.S.-based warehousing
- localized fulfillment
- shorter domestic last-mile networks
- This change realigns cross-border e-commerce with traditional retail and wholesale structures, narrowing the advantage that Chinese platforms enjoyed for years.
2026 and Beyond: A More Complex World for China’s E-Commerce Titans
Looking ahead, Shein and Temu face a more challenging international landscape:
stricter trade policies
- intensified political scrutiny
- rising skepticism in major markets such as the U.S. and France
- escalating logistics and compliance costs
- eroding price advantages
- Despite continued popularity in Mexico, Canada, Brazil, the UK, and Australia, the companies must rethink their strategies for sustainable global expansion.
Conclusion: The Low-Cost Era Is Ending—But Not the Competition
Shein and Temu will not vanish. They remain highly adaptive, data-driven, and aggressively global.
However, the era of tax-free, ultra-cheap, cross-border direct shipping is effectively over in the U.S. market.
The winners of the next stage will be platforms that can transition from:
cross-border arbitrage → local retail infrastructure.
The cheap magic may be fading, but the competition is only beginning.