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Chinese ecommerce giants Temu and Shein have slashed their US spending on advertising platforms, as they wrestle with the end of tax exemptions that have helped them undercut rivals such as Amazon.
Temu cut its spending on platforms including Meta, X and Alphabet’s YouTube by an average of 31 per cent in the two weeks leading to April 13 compared with the previous month, according to estimates from market intelligence group Sensor Tower.
Smarter Ecommerce data also revealed that Temu had axed all spending on Google’s Shopping platform since April 9, when broad China tariffs were introduced.
The advertising pullback by the two retailers, which have grown rapidly in the US since the Covid-19 pandemic at the expense of competitors including Amazon, shows the widespread impact of President Donald Trump’s trade conflict with China.
The moves could hurt the social media platforms, including Meta, that offer advertising space to Chinese sellers so they can reach western audiences.
Temu and Shein were affected by the White House’s decision last week to raise duties on low-value packages arriving from China to 90 per cent of a parcel’s value, or a flat fee of $75 to $150. The move, which goes into force on May 2, will end the “de minimis” exemption that enables goods valued at less than $800 to be shipped duty-free to American customers.
Western rivals have criticised the two companies for undercutting them and selling substandard goods.
“The decision to close the de minimis loophole has been like a targeted weed killer,” said Mike Ryan, an analyst at Smarter Ecommerce.
Temu and Shein have spent billions of dollars engaging in a US advertising blitz in recent years, but still each possess fewer than 1 per cent of the country’s eCommerce market, according to analytics company Consumer Edge.
Meta’s revenue from China was $18.4bn last year, or more than 10 per cent of its $165bn total, according to financial disclosures. In January, it cited tariffs or trade disputes as a potential risk to its business, saying it generated “meaningful revenue from a small number of resellers serving advertisers based in China”.
The two retailers are now pulling back. Shein’s daily average spend across Meta, TikTok, YouTube and Pinterest fell 19 per cent in the first two weeks of April as the tariffs were imposed, the Sensor Tower data shows. It has nearly halved its spending year on year, slashing ad dollars from YouTube in particular.
Temu raised spending on US platforms so significantly in the past year that it was still above 2024 levels, despite the recent decrease, the data shows. Temu was the top advertiser on Elon Musk’s X in the US in 2024.
Meta and X declined to comment. Google, Temu and Shein did not immediately respond to requests for comment.
James McDonald, director of data intelligence and forecasting at marketing intelligence company WARC, said the ad cuts would have an impact on sales because both companies lacked sufficient brand loyalty. “They need to constantly advertise to keep customers.”
The two companies were responsible for more than 30 per cent of the nearly 1.5mn small tariff-free shipments to the US, according to a 2023 congressional report and American customs data.
The duties on low-value packages are still less than tariffs on Chinese imports, which add up to 125 per cent.
