Shein cut prices on its US site after the US temporarily lowered tariffs on Chinese imports.

This reduction aims to help the online fashion retailer recover from declining sales attributed to previous tariff-induced price increases.

The average price of 98 items dropped 13% to US$5.56 as of May 14, 2025, with Shein assuring buyers there are no added tariff fees at checkout.

The tariff reductions, lasting 90 days, include cuts in both general import duties and the de minimis tax on small parcels from China and Hong Kong.

While Shein faces ongoing uncertainty due to still-elevated tariffs, US retailers like Amazon and Walmart reported modest sales growth in early May 2025.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ The de minimis loophole closure fundamentally disrupts fast-fashion economics

Shein and Temu’s business models were largely built around exploiting the de minimis exemption, which previously allowed packages valued under $800 to enter the US duty-free.

The removal of this exemption represents a structural shift in cross-border e-commerce, with these platforms previously accounting for over 30% of all de minimis shipments from China to the US 1.

This exemption was a significant economic advantage, supporting approximately 7% of China’s overseas sales and contributing about 1.3% to China’s entire GDP 2.

The temporary reduction of tariffs from 145% to 30% provides some relief but still fundamentally changes the ultra-low-price model these retailers used to rapidly gain US market share since 2020.

Even with the reduced tariffs, both platforms are experiencing significant business disruption, with transaction volumes dropping more than 20% after price adjustments compared to pre-tariff periods.

2️⃣ Inflation-weary consumers show high price sensitivity and strategic shopping behavior

The timing of these tariff impacts coincides with broader consumer belt-tightening, as 72% of US consumers report concerns about a potential recession affecting their purchasing decisions 3.

This economic anxiety has already shifted consumer behavior, with 66% cutting back on non-essential purchases and 52% switching to store-brand products to save money 4.