De Minimis Repeal Pushes Shein and Temu Prices Up, US Sales Down

The duty break is gone, and the bill landed on cheap orders

For about ten years, Shein and Temu built their U.S. business on a customs rule most shoppers had never heard of. Under the de minimis exemption, any package worth up to $800 could enter the United States without tariffs, fees or taxes. Washington ended that treatment for parcels from China and Hong Kong on May 2, 2025, and a July executive order extended the suspension to every other country11. The global suspension took effect on August 29, 202512.

More than a year later, the result is clear. Prices at the two platforms went up, the fees hit the cheapest items hardest, and Shein's own financial filings now show what the change cost the business. Recent coverage of the policy, from consumer stories to Shein's IPO documents, mostly points the same way. The disagreements are about how far prices rose and whether the two companies can recover their position, not about whether the change hurt them.

How much prices rose

The first price increases came before the rule even ended. Shein and Temu both said they would raise U.S. prices from April 25, 2025, pointing to higher operating costs, and both put out nearly identical promises to keep the impact small18. CNN tracked one Shein swimsuit set that went from $4.39 to $8.39 in a single day. In the last days before the exemption ended, Temu added import charges of 130% to 150% on goods it still shipped from China, and those charges were often bigger than the price of the items11.

One example shows how this felt at checkout. A Tampa accountant told NPR that two dog harnesses in her Temu cart cost about $33 in spring 2025. When she came back a few weeks later, import charges of roughly $46 had pushed the total above $8013.

Estimates of the overall price increase vary more. One tariff-guidance site says prices across these platforms have risen 20% to 40% since the change10. That figure is not supported by the company filings or the academic research, so it is better treated as a rough guide than a measured result. Shein's own description is narrower but just as telling: since May 2025, the company says, it has passed most of its extra tariff costs on to U.S. customers through higher prices21.

Why a flat fee hurts a $5 blouse most

The biggest problem for these platforms was not a percentage tariff. It was the fixed cost charged on every package. For six months from August 29, 2025, mail carriers could pay a flat duty per package, and the lowest rate was $80. For a $5 blouse, that is 16 times the price of the item11. Postal shipments faced flat duties of $80 to $200 per package depending on where they came from2, and that option was set to run out at the end of February 2026, after which shipments would move to value-based duties5.

Customs paperwork adds another layer. A National Bureau of Economic Research working paper estimated that broker and processing fees add about $23.19 to each package. That works out to roughly a 17% tax on the average parcel, and more than four times the price of a $5 item shipped on its own11. The same research estimated the total cost to U.S. consumers at at least $10.9 billion a year, or about $136 per family3.

The effect is regressive, and the coverage agrees on this point. Nearly three-quarters of overseas goods shipped to the poorest zip codes arrived duty-free, compared with about half in the richest. Without the exemption, the average tariff on what the poorest Americans ordered from abroad rose from almost nothing to nearly 12%11. Richer areas lose more in dollars, but poorer households lose two to three times as large a share of their income11. Before the change took effect, the Cato Institute warned that ending the exemption would fall hardest on poorer consumers19. The data now supports that warning.

Shoppers left, and Shein's filings show the damage

Shoppers reacted quickly. Card data analyzed by Bloomberg Second Measure showed Shein's U.S. sales falling 23% and Temu's falling 17% in the week of April 25 to May 1, 2025, compared with the week before27. Sensor Tower data reported by CNBC showed Temu's U.S. daily active users down 52% in May compared with March, and Shein's down 25%15. Both companies also cut their U.S. advertising sharply. Reports put Temu's cut at 87% and Shein's at 69% over three months, which pushed both out of the top 60 U.S. digital advertisers29.

The longer-term numbers are in Shein's Hong Kong IPO documents:

• U.S. revenue fell more than 3% from 2024 to 2025, then 14% year over year in the first quarter of 202621.
• The duty rates Shein faces went from a range of 0% to 62.5% to a range of 10% to 87.5%21.
• Company-wide profit fell 39% between 2024 and 2025, and Shein lost $99 million in the first quarter after earning $395 million a year earlier2123.

The accounting adds some nuance. The BBC notes that the quarterly loss partly reflects a $328 million paper charge from an accounting change involving special investor shares, and that the Iran war also hurt demand and deliveries28. So the de minimis change does not explain the whole swing to a loss. Still, Shein itself says the end of the exemption hurt its U.S. sales and its overall revenue growth28. The decline is also concentrated in America. Worldwide active customers grew more than 16% to 281 million28, and revenue in Europe and other regions kept growing while U.S. revenue fell22. Separately, Euromonitor data showed Shein's U.S. apparel sales down 4.5% in 202524.

Shipping costs show the structural problem. Shein's cost to deliver each order had been falling for two years, then rose to $17.90 in the year ended March 31. In the first quarter of 2026, fulfillment took nearly 48 cents of every revenue dollar, up from about 43 cents a year earlier22.

Two companies, two responses

The two platforms responded differently. Temu changed its model the most. By May 2025, its U.S. site showed only goods shipped from U.S. warehouses, items shipped from China were marked out of stock, and local sellers took over U.S. sales11. Reports disagree on the timing. One outlet dates the shift to March26, and in late August 2025 the Financial Times reported that Temu had restarted shipping from Chinese factories and planned to raise ad spending after a U.S.-China trade truce15. The best reading is that Temu's local-warehouse approach is a hedge it changes with trade conditions, not a permanent new model. PDD co-CEO Lei Chen has said the company will keep recruiting local merchants and speed up warehouse construction11.

Shein says it now files full customs paperwork on U.S. orders and has moved inventory and order handling closer to its customers. Its rising delivery costs show what that has cost22. For years Shein said its low prices came from its on-demand supply chain, not from a loophole21. Its own filing now undercuts that position: it says a substantial majority of U.S. purchases used to arrive under the $800 limit11.

Not every analyst thinks the price gap has closed. eMarketer argued that even after tariffs, Temu and Shein still undercut competitors, but that constant headlines and smaller ad budgets made that harder for shoppers to see27. That may be true for some items. But Measure Protocol puts it more sharply: a wardrobe built on $4 to $12 items does not fit a world where those items cost $15 to $30. It also found that 71% of Shein shoppers already shop at Target11. When the price gap narrows, those customers have familiar alternatives.

The rule is likely to stay

Political change is unlikely to bring the exemption back. When the Supreme Court struck down Trump's emergency-powers tariffs on February 20, 2026, the president signed an order the same day keeping the de minimis suspension in place. Customs and Border Protection has since written the suspension into its own regulations for non-mail shipments, and Congress repealed the exemption for commercial shipments in the One Big Beautiful Bill Act22. Even so, more than 940 million low-value parcels arrived last year, about a quarter fewer than in 2024, and CBP collected more than $1 billion in duties between May and December 202522.

Europe is now going through the same change. The EU ended its €150 exemption in July and replaced it with a €3 duty for each product category in a shipment21. Shein has warned that its European results could match or exceed the decline it saw in the U.S.23. Early German data shows sales at Shein, Temu and AliExpress falling sharply, with another €2 handling fee due in November.

The U.S. experience points to one conclusion. Ultra-cheap cross-border shopping depended on a customs rule, and the two companies now have to compete on delivery speed, local warehouses and services rather than on price alone. Shein's filings suggest that is a harder business with lower margins. Lower-income households, who used these platforms most, are paying the largest share of the cost.