President Donald Trump’s new tariffs, set to take effect on Tuesday, Feb. 4, are throwing a wrench into the rapid rise of e-commerce giants like Temu (PDD-5.84%) and Shein, while potentially giving Amazon (AMZN+0.03%) a chance to reclaim its edge.
The tariffs eliminate the de minimis exemption, which allowed shipments under $800 to enter the U.S. without incurring tariffs. The exemption had been a significant advantage for Chinese retailers like Temu and Shein, who used it to ship small, low-cost items directly to American consumers, bypassing higher tariff costs.
While the tariffs are rooted in concerns over consumer safety and fair trade, they are also shifting the dynamics of the market – particularly for U.S.-based retailers like Amazon. These changes are a direct result of the Biden administration’s crackdown on the widespread abuse of the trade loophole.
Now, with the removal of the exemption, the playing field is shifting. U.S. shoppers may soon find fewer deals from these Chinese platforms, including longer wait times, as the cost of importing goods rises. Temu, for example, was on track to reach $30 billion in sales under its strategy to offer cheap goods in exchange for longer delivery times. But with the new tariffs, its reliance on low-cost, individual shipments from China are likely to become more expensive.
Temu, the U.S. offshoot of Pinduoduo, launched in 2023 and quickly became stiff competition for Amazon. Even before Trump’s tariffs, the online mega store had been exploring options for speedy delivery, including expanding its marketplace to U.S.-based sellers. In August 2024, it’s founder, Colin Huang, staged a dramatic comeback, becoming China’s richest person.
However, the removal of the de minimis exemption could give Amazon a major competitive boost. Amazon already has established U.S. infrastructure, faster shipping, and few tariff obstacles. The company also launched an ultra-cheap platform, Haul, in November 2024 to compete directly with Temu and Shein. While Amazon isn’t immune to tariff costs, its business model is better positioned to absorb them than its competitors.
For Shein, the timing of the tariffs adds uncertainty to its delayed U.S. IPO, which was initially expected in 2024, but has faced several setbacks, including concerns over its labor practices. As the company scales back on its ability to offer ultra-low prices, the appeal of its fast-fashion model may weaken, putting its market position at risk.
Trump’s new tariffs could turn the tables, slowing down the growth of Temu and Shein, while giving Amazon the runway it needs to regain ground in the competitive race for U.S. shoppers.
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