US e-commerce giants Temu and Shein are significantly reducing their spending on US social media advertising amid rising tariffs, as they prepare to raise product prices next week.
Tariff Impact on E-Tailers: A Shift in US Advertising Spending
Cheap shipments from China and Hong Kong are no longer exempt from US tariffs, forcing e-tailers like Temu and Shein to adjust their strategies. The removal of the ‘de minimis’ exemption, which applied to sales valued under $800, will increase costs for these online retailers.
The United States imposes tariffs on imported goods to protect domestic industries and generate revenue.
Tariffs are taxes levied on foreign-made products, typically expressed as a percentage of the product's value.
The US government sets tariff rates for various countries and products, with some items exempt from duties.
Tariffs can be used to address trade imbalances, support domestic employment, or retaliate against unfair trading practices.
The Rise and Fall of Ad Spending
In recent weeks, Temu and Shein have significantly reduced their spending on US social media advertising. According to digital marketing firms Sensor Tower and Tinuiti, the daily average ad spend for Temu declined by 31% on Facebook, Instagram, TikTok, Snap, X, and YouTube over a two-week period. Similarly, Shein’s daily average ad spend on Facebook, Instagram, TikTok, YouTube, and Pinterest fell by 19% during the same time frame.
Temu’s ads on Google Shopping have also seen a sharp reduction since April 12th. These decreases in ad spending indicate that e-tailers are reassessing their marketing strategies in response to the new tariff regulations.
Price Hike Looms
As a result of the tariff changes, Temu and Shein plan to raise product prices next week. This move aims to offset the increased costs associated with shipping goods from China and Hong Kong. The price hikes will likely impact consumer behavior, particularly in a market where fast fashion is popular.
The removal of the ‘de minimis’ exemption has significant implications for e-tailers operating in the US market. As they adapt to these new regulations, it remains to be seen how this will affect their overall business strategies and customer relationships.
