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.