What: Temu and Shein dramatically reduce US digital advertising spend as Trump's elimination of duty-free imports threatens their business model.

Why it is important: The advertising cutback reflects a fundamental shift in cross-border e-commerce as regulatory changes force Chinese retailers to restructure their operations and pricing strategies.

Chinese e-commerce giants Temu and Shein are significantly reducing their US digital advertising expenditure in response to impending changes in import regulations. Temu's daily average ad spend across major platforms including Facebook, Instagram, TikTok, Snap, X, and YouTube has declined by 31%, while Shein has cut spending by 19%. This strategic shift comes as President Trump's executive order eliminates the de minimis exemption, which previously allowed duty-free entry for merchandise valued under USD 800 from China and Hong Kong. The policy change, effective May 2, will force both companies to raise product prices, fundamentally challenging their ultra-competitive pricing model. The reduction in advertising spending across major social media platforms represents a significant blow to tech companies like Meta and Google, which have benefited substantially from these retailers' aggressive marketing strategies.

IADS Notes: The dramatic reduction in advertising spending follows a series of challenges for Chinese e-commerce platforms. In February 2025, Shein's valuation was cut to USD 50 billion for its delayed London IPO, while offering 30% higher procurement prices to relocate manufacturing to Vietnam. March 2025 saw mounting pressure as China's Ministry of Commerce opposed supply chain diversification, complicating adaptation strategies. These developments align with Forrester's October 2024 prediction of plummeting growth rates for both companies, while the EU's implementation of stricter platform liability rules in February 2025 further intensified regulatory scrutiny. The convergence of these factors suggests a fundamental transformation in the cross-border e-commerce landscape.

Temu, Shein slash US digital ad spend as de minimus threshold set to end