Amid escalating U.S. tariffs, Chinese e-commerce giants Temu and Shein are strategically pivoting their focus to Europe, aiming to offset declining U.S. sales and capitalize on the region’s growing demand for affordable online shopping.
U.S. Market Challenges
The U.S. market, once a significant revenue stream for both platforms, has become increasingly challenging. In May 2025, Temu experienced a 48% drop in daily U.S. users compared to March, following the termination of the “de minimis” tariff exemption. This change introduced substantial duties on low-value shipments from China, impacting Temu’s cost structure and pricing strategy. Similarly, Shein reported a 13% decline in U.S. sales over the same period.
European Expansion Efforts
In response, both companies are intensifying their presence in European markets. Temu’s year-over-year sales in the European Union surged over 60% in early May, with France leading at nearly 100% growth. Shein also maintains strong momentum across the region, especially in the U.K., where its growth hovers around 50% .
Advertising expenditures in Europe have increased significantly. Temu’s ad spending rose 40% in France and 20% in the U.K. month-over-month in April, while Shein increased its spend by 35% in the same countries .
⚠️ Regulatory Scrutiny in Europe
Despite their expansion efforts, both platforms face regulatory challenges in Europe. The European Union is implementing new customs reforms, including a €2 flat fee on previously customs-free small packages from online marketplaces like Temu and Shein . Additionally, consumer watchdogs have filed complaints accusing Shein of employing “dark patterns”—manipulative design tactics intended to boost purchases—on its app and website .
Strategic Adjustments
To mitigate the impact of U.S. tariffs, Temu has reduced its advertising budget in the U.S. and shifted to a local fulfillment model. This approach involves shipping individual orders from China to Temu-partnered U.S. warehouses, requiring merchants to manage tariffs and customs charges .
Shein has also adjusted its pricing models, absorbing some costs to maintain competitive pricing, leveraging its stronger profit margins. Both companies are diversifying their supply chains and exploring new markets to reduce dependency on Chinese manufacturing and minimize exposure to U.S. tariffs .
Market Impact
The shift in focus from the U.S. to Europe reflects broader market dynamics. In May 2025, U.S. consumer spending on Temu fell about 36% compared to a year earlier, while Shein’s fell 13% over the same period . Conversely, both companies are experiencing growth in European markets, indicating a strategic realignment in response to changing trade policies.
As Temu and Shein navigate the complexities of international trade and regulatory environments, their ability to adapt to local market conditions and comply with regional regulations will be crucial for sustained growth and competitiveness in the global e-commerce landscape.
