Shein and Temu Aim to Move Production to Avoid US Tariffs

Amid uncertainty around U.S. tariffs, Shein and Temu are reportedly working with their suppliers to move production out of China.

The eCommerce firms are doing so as the Trump administration considers the future of the de minimis exemption that allows packages worth less than $800 to enter the U.S. without a tariff, The Wall Street Journal reported Friday (Feb. 14).

After announcing that it would eliminate that exemption on packages from China, the administration later paused the order until the U.S. develops a way to process those small packages, according to the report.

The imposition of new duties by the U.S. would eliminate the price advantage Shein and Temu currently have over their U.S. competitors, the report said.

In the meantime, Shein has been working to diversify its supply chain by sourcing products from, and building warehouses in, countries other than China, according to the report.

Temu responded to the uncertainty around tariffs by raising prices and by pressing its suppliers to store inventory in the United States, the report said. More than one-third of the products it sells to consumers in the U.S. are fulfilled with inventory maintained in the U.S. The company is also boosting its efforts to sell in countries other than the U.S.

The value of imports from China that entered the U.S. under the de minimis exemption reached $46 billion in 2024, and 30% of those packages came from Shein and Temu, per the report.

It was reported Feb. 7 that the imposition of tariffs on small packages imported to the U.S. from China led Shein to consider cutting its valuation in a potential London initial public offering (IPO) by nearly 25%.

The firm may cut its valuation to $50 billion, which would be down from the $66 billion at which it was valued in a 2023 funding round.

It was reported Tuesday (Feb. 11) that Temu’s overhaul of its Chinese supply chain could lead to higher prices on its platform.

With Temu moving away from a model in which merchants allowed it to handle things like price-setting, shipping and marketing, merchants could lose the economies of scale in shipping and handling offered by the company.