Shein’s Bargain-App Formula Crumbles Under Trump

The meteoric popularity among American shoppers of China-founded app Shein was greatly helped by duty-free shipping of its ultra-cheap fashion. After President Trump closed that option for Chinese goods, its clothes will now bear the full impact of his new tariffs.

The U.S. tariffs imposed on Wednesday and China’s retaliation throw a wet blanket over all goods trade between the two countries. For Shein, the additional impact of Trump’s move to end the so-called de mini m is exemption for China means a double hit and perhaps the most pivotal challenge for the fashion giant, whose links to China have long landed it at the center of U.S.-China tensions.

The fashion giant had already shifted its plans for an initial public offering from New York to London, where it had hoped to list by June. But Trump’s new tariffs on China and elimination of duty-free exemption for China on goods valued at $800 or less effective May 2 makes its prospects of going public at all increasingly dim.

The nimble supply chain that Shein prides itself on now faces enormous pressure to keep costs low.

“Shein will probably have to reinvent the wheel,” said Vinci Zhang , an analyst at research and analytics firm M Science. “It’s almost certain they will raise the price, otherwise they won’t survive.”

Shein didn’t respond to a request for comment.

Because Trump only ended the de minimis option for China, Shein could still ship wares to the U.S. tariff-free from other countries. Shein had encouraged some suppliers to move their factories to Vietnam, but Trump’s announcement last week of 46% tariffs on goods from Vietnam has undermined such efforts. On Wednesday, Trump authorized a 90-day delay on most tariffs while increasing tariffs on China.

Cathy Lin , who runs a Guangzhou-based contract manufacturer that supplies Shein and its Chinese rival Temu, has put on hold her plan to set up a factory in Vietnam. “Moving there might not be a once-and-for-all solution,” she said. Lin said she has found two partners in Macau and Vietnam who can temporarily help ship parcels to the U.S.

Trump first tried to end the duty-free exemption for China in February, but had to delay the crackdown to let the Commerce Department set up a system to process inspections and levies on the shipments. Shein, now based in Singapore, has argued that the de minimis exemption isn’t critical to its success. Nevertheless, during the two-month reprieve, Shein has scrambled to prepare.

Shein, whose clothing, on average, costs 20% to 35% less than fast-fashion rivals such as Zara and H&M , has raised prices on some items in the past two months. Eight sellers on Shein and Temu, which also increased some prices, said orders from the U.S. have fallen by 20% to 50% in March compared with January.

After Trump’s latest tariff announcement, Brian Luo , who runs a U.S. delivery company that helps companies such as Shein and Temu get parcels to U.S. customers, said the delivery orders he received for Monday plunged to 1,600 from a daily average of 4,000.

“Once the tariffs are added, people might shift back to Amazon , especially because their delivery speed is faster,” Luo said.

Under the new U.S. tariffs, apparel imported from China could face total levies close to 150%, according to Sheng Lu, professor of fashion and apparel studies at the University of Delaware.

Shein has no customers in China, though it subcontracts with thousands of factories there to power its enormous selection of cheap apparel and respond to fleeting consumer tastes. The company has been diversifying its supply chain in the past few years and now also manufactures in Brazil and Turkey, closer to its consumers in North America and Europe.

In recent months, Shein has been in talks with manufacturers in the U.S. to produce some of its clothing there, people familiar with the matter said. More than one-third of Temu’s U.S. orders are now fulfilled by sellers with inventory in the U.S.

In a rare public comment, commerce officials in Guangzhou, where many Shein suppliers are based, told a Communist Party-controlled newspaper that Shein was increasing investments in China and denied that its suppliers are moving out of China.

Nonetheless, Goldman Sachs analysts on Monday lowered forecasts for Temu’s gross sales by as much as a third to a range of $63 billion to $84 billion.

Temu, owned by Chinese e-commerce company PDD Holdings , didn’t respond to a request for comment.

Last year, companies sent small packages worth $46 billion to the U.S. from China under the de minimis exception, representing 11% of U.S. imports from China, Nomura economists estimated.

While the U.S. is one of its biggest markets, Shein sells to more than 150 countries.

In a chat group on WeChat with more than 200 merchants who sell to American consumers on Shein or Temu, vendors raced to come up with contingency plans. “If I can’t sell to the U.S., that’s OK. There are still other good markets,” said Wang Xianwei , a kitchen-utensil seller in China.

But Shein has run into regulatory and political issues around the world. The European Union is also looking to close its own version of the de minimis provision, and some countries have already ended similar loopholes.

Shein’s revenue grew 19% to around $38 billion in 2024, below the increases of 40% or more that the company had seen in the past few years, people familiar with the retailer said.

Since its New York listing plans collapsed, Shein has strengthened its focus on compliance to meet political and regulatory challenges. Its London IPO application has been awaiting approval from Chinese and British regulators since last June.

“Trump’s tariffs and other policies are closing the window for the IPO,” said a person close to Beijing’s thinking.

The Australian sharemarket rose during four of five sessions in the week ending 30 October, but the headline gain concealed a sharp divide between recovering miners, rate-sensitive property stocks and retailers hit by inflation and weaker trading updates.

The Australian sharemarket finished October with a positive week, although the route higher was anything but uniform.

The S&P/ASX 200 closed Friday 30 October at 8,908.1, gaining 112.9 points, or 1.28 per cent, from the previous Friday’s close of 8,795.2.

The All Ordinaries advanced 1.34 per cent to 9,025, while the more concentrated S&P/ASX 20 gained 1.11 per cent.

The benchmark rose during four of the week’s five sessions. It added 0.17 per cent on Monday and 0.46 per cent on Tuesday, before slipping 0.03 per cent on Wednesday. It recovered 0.50 per cent on Thursday and gained another 0.18 per cent on Friday.

The index briefly reached 8,933.3 but again failed to establish itself above the psychologically important 9,000-point mark.

The week’s central tension was between a resources recovery and a less forgiving domestic interest-rate outlook.

Materials gained 4.06 per cent, reclaiming part of the previous week’s heavy fall. Australian real estate investment trusts rose 3.77 per cent, financials gained 1.05 per cent and energy advanced 1.39 per cent.

At the other end of the market, consumer staples fell 5.13 per cent and consumer discretionary shares lost 2.35 per cent. Utilities declined 0.73 per cent and communication services eased 0.68 per cent.

Inflation changes the conversation

Australia’s September inflation data was the week’s pivotal domestic release.

Annual inflation of 4.3 per cent pushed market pricing towards another possible Reserve Bank increase and disrupted Wednesday’s early sharemarket rally.

By Thursday’s close, one widely followed market measure placed the probability of an increase in the cash rate to 4.85 per cent at approximately 80 per cent.

That pricing does not make an increase certain. It does, however, change the framework through which investors assess Australian businesses.

Companies dependent on discretionary household spending face renewed pressure on sales and margins. Property trusts, banks, developers and highly leveraged companies must be considered against the prospect of higher funding costs.

Banks present a more complicated equation. Higher rates can support margins, but they may also slow credit growth and increase arrears.

Miners recover

BHP gained 4.56 per cent across the week to close at $57.56, making a substantial contribution to the benchmark’s rise.

The recovery followed an 8.3 per cent fall during the previous week and helped lift the broader materials sector.

Northern Star Resources added 4.59 per cent, while Goodman Group advanced 6.85 per cent to become the strongest performer in the ASX 20.

The commodities picture was mixed. Gold fell approximately 3.12 per cent on the cited weekly measure, while Brent crude added around 0.68 per cent.

The Australian dollar was little changed at approximately US70.35 cents at the reference point.

Supermarkets and consumer shares retreat

The consumer-staples story was markedly weaker.

Coles fell 11.77 per cent after its first-quarter update, making it one of the largest significant-company declines of the week.

Woolworths lost 3.66 per cent and Wesfarmers fell 4.48 per cent to $76.69 as investors processed company trading commentary against the prospect of another squeeze on household demand.

The moves illustrate how quickly expectations can change when an apparently defensive company disappoints.

Supermarkets still benefit from the recurring need for groceries, but customers can trade down, shift between chains and reduce spending on higher-margin discretionary lines.

Wesfarmers carries exposure to several consumer categories through businesses including Bunnings, Kmart and Officeworks. A renewed rate increase would place more pressure on households already confronting higher prices.

The wider market’s biggest movements

Among companies outside the ASX 20, Mesoblast surged 27.32 per cent, SiteMinder gained 22.74 per cent and Zip rose 22.60 per cent.

The sharpest weekly falls included 4DMedical, down 33.51 per cent; Tuas, down 29.95 per cent; Catalyst Metals, down 17.47 per cent; and Champion Iron, down 13.35 per cent.

Those percentages require context.

The movements in BHP, Commonwealth Bank and other very large companies had substantially more influence on the index than similarly dramatic changes among smaller companies.

A 20 per cent move in a relatively small stock may attract more attention than a two per cent rise in a major bank, but the bank can have the greater effect on the market.

How the ASX 20 moved

The following list uses the S&P/ASX 20 constituents and five-session movements reported at the 30 October close.

Where the component feed did not publish a valid five-day comparison, no figure has been estimated.

BHP Group: Up 4.56 per cent

Commonwealth Bank: Up 1.66 per cent

Rio Tinto: Down 2.20 per cent

National Australia Bank: Up 0.48 per cent

Westpac: Up 0.08 per cent

ANZ Group: Up 1.92 per cent

CSL: Up 2.05 per cent

Macquarie Group: Up 2.19 per cent

Wesfarmers: Down 4.48 per cent

Woodside Energy: Up 1.43 per cent

Goodman Group: Up 6.85 per cent

Telstra: Five-day comparison unavailable from the cited component feed

Woolworths: Down 3.66 per cent

Fortescue: Five-day comparison unavailable from the cited component feed

Transurban: Down 2.40 per cent

QBE Insurance: Down 1.21 per cent

Aristocrat Leisure: Up 0.63 per cent

Northern Star Resources: Up 4.59 per cent

Sigma Healthcare: Down 0.36 per cent

Brambles: Down 1.20 per cent

The companies dominating the conversation

Coles was the week’s standout media-facing company for the wrong reason.

Its trading update produced an outsized repricing and drew attention across the grocery and retail sectors. Woolworths and Wesfarmers were also scrutinised as investors considered how stubborn inflation and another possible rate rise could affect sales volumes.

Bank of Queensland offered a more positive corporate signal.

The bank reported that its FY26 net interest margin had risen six basis points to 1.70 per cent, ahead of the 1.68 per cent expected by the market according to contemporaneous reporting.

Bank of Queensland shares rose 5.8 per cent on Thursday, while the major banks also rallied.

Endeavour Group finished Friday at $3.39, up 4.31 per cent on the day, and released the results of its annual general meeting.

The movement was notable during a week in which investors were highly sensitive to consumer-facing companies. The AGM result should not, however, be presented as the sole cause of the share-price increase without further supporting company guidance.

Mesoblast’s 23.4 per cent Thursday rise and 27.32 per cent weekly gain returned the biotechnology company to the centre of market attention.

For editors, it is important to separate the size of that percentage movement from its influence on the index. Mesoblast was an eye-catching performer, but it did not drive the ASX 200 in the way BHP or Commonwealth Bank did.

Qantas remained part of the broader market conversation as investors watched travel demand and company updates.

However, the primary-source review did not locate a fresh Qantas announcement that justified attributing a major weekly market movement to new company information. The airline should therefore remain on the monitoring list rather than being forced into the week’s causal narrative.

Is Australia’s IPO market reopening?

The official ASX new-listings pipeline remains active but selective.

ASX’s upcoming-floats page included formal applications with offer timetables extending through October and at least one anticipated listing on 30 November.

The exchange notes that its page covers companies for which a formal listing application has been received. It does not represent every company privately exploring a float.

The wider debate concerns whether Australia’s public market is sufficiently competitive when high-growth businesses can pursue capital in the United States or remain privately funded for longer.

ASX has previously raised possible reforms designed to improve the attractiveness of the local market. These include debate about reducing minimum free-float requirements and streamlining aspects of the admissions process.

An enhanced fast-track pathway for qualifying applicants can shorten the review process, reducing the execution risk created when market conditions change during a long IPO timetable.

That does not remove the more fundamental challenge.

New floats still require credible earnings or a convincing growth pathway, sensible pricing and enough genuine free float to support trading after listing.

Investors can already obtain diversified exposure through low-cost exchange-traded funds or buy established, liquid businesses. A float must therefore offer more than novelty.

The current pipeline suggests that the IPO window is open, but it is not indiscriminate.

What investors will watch next

The Reserve Bank’s next decision now sits at the centre of the domestic outlook.

Any change in cash-rate expectations will flow rapidly through banks, retailers, property trusts, listed developers and companies carrying substantial debt.

Investors will also watch whether the materials recovery can continue, whether BHP can hold its rebound and whether consumer companies provide further evidence of slowing demand.

Overseas, technology-sector volatility, commodity prices and the United States interest-rate outlook will continue to shape Australian trading.

The week’s 1.28 per cent headline gain was encouraging, but it was not a broad declaration of confidence.

It was a rotation towards miners, selected financials and property securities—and away from consumer businesses facing a more difficult inflation and interest-rate equation.

Market dashboard

S&P/ASX 200: 8,908.1, up 1.28 per cent for the week

All Ordinaries: 9,025, up 1.34 per cent

S&P/ASX 20: 5,214.7, up 1.11 per cent over five sessions

Best sector: Materials, up 4.06 per cent

Next-best sector: A-REITs, up 3.77 per cent

Weakest sector: Consumer staples, down 5.13 per cent

Major large-cap winner: Goodman Group, up 6.85 per cent

Major large-cap loser: Coles, down 11.77 per cent

AUD/USD: Approximately US70.35 cents at the weekly reference point

Gold: Approximately US$3,885 an ounce, down 3.12 per cent on the cited weekly measure

Brent crude: Approximately US$117.70 a barrel, up 0.68 per cent on the cited weekly measure