Why are Shein and Temu raising their prices?

Both consumers and industry analysts have taken notice of the recent announcements made by Chinese fast-fashion giants Shein and Temu, saying they will be raising their prices due to new U.S. tariffs. Beginning on April 25, 2025, these retailers will adjust their product pricing due to the U.S. government’s decision to remove the “de minimis” exemption, which formerly allowed duty-free importation of products under $800.

The primary focus of this tariff reform, which takes effect on May 2, 2025, is low-value cargoes from Hong Kong and China. It will immediately affect the core business strategy that has allowed Shein and Temu to succeed quickly.

These businesses have prospered by swiftly and directly supplying American consumers with low prices because of favorable tariffs. Shein and Temu will have to raise prices to cover increased import costs because of the de minimis exemption being removed, which will impose substantial tariffs on these formerly duty-free goods. The immediate response from customers has been beneficial as Shein and Temu saw significant increases in sales as word of the impending price increase spread. Temu saw an even more remarkable 60% increase in revenues during the first eleven days of April than last year, while Shein reported a 38% increase in revenue.

Consumers’ desire to stock up on cheaper goods before the higher tariffs go into effect is demonstrated by this buying frenzy, which reflects worries about how these changes will affect their purchasing habits in the long run. The potential impact of these tariffs in the long term is shown by recent consumer behavior. Shein and Temu’s attraction as low-cost shopping destinations may weaken as prices unavoidably rise, driving customers to look for other platforms.

Industry analysts are careful about how this tariff change might affect consumer behavior, especially regarding more cost-effective and environmentally friendly options like secondhand markets. Sites like eBay, ThredUp, and Poshmark greatly benefit from this change. These marketplaces draw customers who were previously drawn to low-cost fast-fashion retailers because they provide sustainable appeal and reasonable prices. Changes in international trade policy directly impact the expected move to secondhand marketplaces, which represents a significant shift towards sustainability-driven spending. 

The tariff changes also highlight how interconnected international trade policies are and how they affect the economy as a whole. U.S. policymakers introduced tariff adjustments to protect domestic markets from low-cost foreign goods and close the trade deficit with China. This action also shows consumers how their spending, e-commerce business models, and general market dynamics are impacted. Similar e-commerce companies that depend on low-value imports from China might encounter comparable difficulties, which could lead to a more extensive industry restructuring.

On top of that, as these tariff-induced price changes spread throughout the market, the competitive environment for online retail is expected to change quickly. Retailers in the United States and other foreign markets may perceive a chance to gain market share, which could change international e-commerce tactics. Temu and Shein’s higher expenses draw attention to weaknesses in the global direct-to-consumer supply chain, which may force these businesses to reevaluate their pricing, sourcing, and logistics plans to stay competitive.

The change in tariffs demonstrates how decisions regarding international trade impact consumers and businesses. The sales in the short term boost the company and are brought on by panic buying. This contrasts with the longer-term difficulties these businesses are currently dealing with when panic buying ends. We are seeing how retailers need to find a careful balance between maintaining sustainable practices, offering competitive prices, and managing complex global trade dynamics.