Tariffs didn’t bring jobs back, but they did break Temu

US President Donald Trump said that his sweeping tariffs on Chinese imports would spur an industrial revival for his country, or at least reshoring. The reality has been quite different.

One unexpected consequence of the trade war: a flood of Chinese sellers using social media app TikTok to pitch US$12 sneakers and US$9 leggings to American consumers – factory-direct, hassle-free, and brand-free.

Photo credit: Temu

Some claim they make the exact same products sold by Western brands – claims that have been disputed, but it almost doesn’t matter. The message resonates: why pay for the label when customers can buy straight from the source?

What looked like an end-run around tariffs is something else entirely: a pressure test. Not for American consumers, but for ecommerce platforms built on cutting off middle layers and winning by being the most affordable options around, Temu chief among them.

The results of that pressure test? Not pretty.

The platform glow-up is over

Temu, the flagship of China’s cross-border discount surge, is hitting turbulence.

In April, it pulled back on US advertising, which led to paid traffic falling by 77%, according to SimilarWeb data cited by NBC News. When the growth budget dried up, so did the traffic – daily US users of the platform fell by 48% in May compared to March, according to data from Sensor Tower cited by Reuters.

See also: Trade wars force rewrite of Southeast Asia’s VC playbook

Temu has spent heavily on US digital advertising since its launch in 2022, but that phase is likely over. The firm has long relied on low prices, viral marketing, and minimal public relations or reputation-building efforts to focus on growing its gross merchandise value, but that playbook isn’t built for the current environment.

Behind this is a more fundamental question: What did all that spending actually buy?

The Wall Street Journal reported that PDD Holdings, Temu’s parent company, saw its first-quarter profit plunge nearly 50% from the same period in 2024, while its stock fell 14% after it announced its Q1 earnings.

Executives spent the earnings call attempting to placate frustrated merchants, many of whom feel squeezed by the very platform they helped grow.

“Our profitability is likely to face challenges in the near term and potentially in the longer term,” admitted PDD vice president Liu Jun in the call.

Tariffs shifted the terrain, not the game

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