The expansion of the legal loophole for shipments of merchandise free of tariffs almost a decade ago gave rise to Temu, Shein and other low -cost retailers that offer items directly from Chinese factories with unfathomable discounts.
He also triggered something else: a waterfall of billions of dollars of digital advertising that meant an unexpected gain for goal, Alphabet and other giants of the technology industry. Temu and Shein, competing for capturing the attention of American buyers, covered practically every centimeter of the Internet with their ads. In the last two years, only Amazon spent more on online advertising in the United States than Shein or Temu.
Now, the advertising bonanza could be coming to an end after the disappearance of the legal lagoon regarding shipments that promoted it.
On May 2, President Donald Trump eliminated the exemption that had allowed goods manufactured in Continental and Hong Kong for less than US $ 800 to enter the United States without being subject to import taxes. For Temu and Shein, this means that they are now subject to tariffs up to 145 percent to import Chinese products. Last week, Temu began adding “import positions” to certain products, which duplicated the total price of purchase and shipment of the items.
A Temu spokesman said Friday that the company had stopped sending China products directly to customers in the United States, and that their US orders would now be sent from local stores in that country, as the company “makes the transition to a local compliance model.” Shein did not respond immediately to an email in which comments were requested.
The new tariffs are expected to suppose a hard blow for companies that are based on selling products at very low prices and attracting customers through aggressive advertising on the Internet.
Using the slogan “Buy as a millionaire”, Temu bought advertising time during the Super Bowl.
The parent company of Temu, PDD Holdings, used a similar strategy for its electronic commerce application in China, Pinduoduo, spending abundantly in advertising to grow rapidly in a competitive market.
Sky Canaves, principal retail and electronic trade analyst at the EMARKETER research company, said the Temu and Shein ads were before “inescapable” in searches, social networks and applications. But that is changing.
“They have already retired their advertising to a large extent,” he said.
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In a period of two weeks as of March 31, Temu spent 31% less on daily advertising on Facebook, Instagram, Tiktok, Snap, X and YouTube that its average daily expense on those platforms in the previous 30 days, according to estimates of Tower sensor, a market intelligence company. Shein’s daily advertising spending on his social networks in the United States descended 19% in the same two weeks.
Temu and Shein, who had flooded Google in the United States with advertisements of the products they sell, began to disappear from the platform in April. On April 5, Temu represented 19 percent of all American ads shown in Google Shopping, but that figure was reduced to zero a week later, according to a study by the marketing company Tinuiti. Shein went from about 20 percent at the beginning of April to zero on April 16.
Tinuiti identified tariffs as the main factor of advertising decline. He said that the reduction of spending coincided with the increase in prices of both companies in certain products.
Without the constant advertising presence, Temu and Shein applications have fallen from the lists of the 10 most downloaded mobile applications in the United States. Temu served about 30 million daily users in the United States, as revealed by the company in a lawsuit filed against Shein in 2023.
In Meta, owner of Facebook, Instagram and WhatsApp, some Asian retailers had already reduced their advertising spending in the United States in anticipation of the end of the so -called minimis exemption, said Susan Li, Financial Director of Meta, at a telephone conference with investors on Wednesday. Part of the expense has redirected the finish lines in other markets, but the expense in April was lower than the previous year, he said. Li did not appoint any of the companies.
Investors were closely as a goal because China’s advertisers, headed by Temu and Shein, had been one of the company’s greatest segments. Last year, China advertisers generated revenues of US $ 18,400 million for the finish line, which represents about 11% of its total and more than double since 2022.
Snap, a social media company, said that “a subset of advertisers” had cut out the expense due to changes in the legal lagoon of shipments. The company refused to provide a forecast for its current quarter, arguing the uncertainty caused by tariffs. Snap shares fell 12 percent after the ad.
Last week, Philipp Schindler, commercial director of Google, said that changes in the tariff lagoon “will obviously cause a slight wind against our advertisements in 2025”, mainly by Asian electronic commerce companies. Nor did he identify concrete companies.