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New US tariff on small orders knocks down sales of Chinese platforms and forces mass layoffs, understand everything below.
The trade war between United States and China gained a new chapter in April 2025, and the focus now falls on e-commerce platforms like Shein and Temu, in addition to the Chinese industrial structure that supports them. Learn more about Shein's growth: What is Shein and why has it become one of the largest retailers in the world?.
With an executive order signed by Donald Trump, the US ended the tax exemption for orders up to US$800, known as De Minimis, which radically changes the game for Chinese e-commerce.
The decision by the current US president, who seeks to force China to renegotiate trade tariffs, directly affects the business model based on direct shipments from the factory to the consumer. Platforms such as Temu, which grew by offering cheap products with free international shipping, are among the most impacted.
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👉 Want to better understand how this e-commerce giant works and why it is attracting so much attention in Brazil? Read here: What is TEMU and why is it attracting so much attention in Brazil?
In addition to the end of the exemption, the US imposed import taxes of up to 120%, accompanied by a fixed cost of up to US$2 per postal item. The result is already being felt: a drop in sales, advertising cuts and the closure of factories in China.
US De Minimis exemption ends, sales at Shein and Temu plummet
Platforms like Shein and Temu, which have structured their operations around cheap, duty-free international freight, are now facing a new reality. Reports from April show that Temu lost 30% of sales in the United States in a few weeks. Shein, in turn, reduced by 90% the advertising budget in the country.
These measures reflect the collapse of a model that depended on direct shipping to the end consumer, without intermediaries, using the so-called D2C system (direct to consumers). With the tariffs now in place, many products have become financially unviable, affecting the competitiveness of platforms in the world's main consumer market.
Factories in China close as international e-commerce collapses
With drop in sales of Chinese products in the United States, hundreds of factories began to close their operations. The region of Xin Village, known for producing items for Shein, reported a reduction of up to 50% on demand in recent weeks, according to information from Reuters.
Suppliers have reported that the suspension of orders is widespread. Workshops with dozens of employees have already halted production, accumulating stocks of clothing and accessories that can no longer be sold. In just two months, several industrial warehouses have been deactivated, according to local reports published by outlets such as Bloomberg and the Global Times.
Trump's moves strike directly at the heart of China's global trade strategy
Donald Trump’s executive order is not just about tax revenue. It is a strategy to force China to negotiate. While Beijing imposes high taxes on American products, the United States has previously exempted products worth up to $800 from any tariffs — an advantage that has benefited Chinese trade.
With the end of De Minimis, Washington seeks to rebalance the trade balance and create diplomatic pressure. In addition to tariffs on 120% off Chinese products up to $8, there will be a additional fee of $1 to $2 per item from June 2025. This makes cheap international shopping impossible and mainly affects China's online platforms.
Shein's attempt to move production to Vietnam blocked by China
Faced with the crisis, the Shein tried to transfer part of its production chain to Vietnam, seeking to reduce costs and escape the new American tariffs. However, the Chinese government intervened, according to information from Bloomberg, “advising” the company not to diversify its supply chain. Understand how Shein built its global production model in this article: Understand the business model that took Shein to the top.
Beijing fears that a mass migration of factories to neighboring countries could weaken China's industrial economy, worsening unemployment and recession in some provinces. As a result, even in the face of a sharp drop in sales to the United States, large companies are under pressure to maintain their operations in China.
European Union also studies taxing products from platforms such as Temu and Shein
With increase in Chinese exports to Europe, the European Union is also evaluating new tariff measures against platforms like Shein, Temu, Shopee and AliExpress. The bloc fears a “flood of Asian products,” which could compromise local production and generate unfair competition — a practice known as dumping.
While the United States has been implementing the new restriction policy since May, European authorities are discussing similar models to limit the advance of direct e-commerce from China. This puts even more pressure on large platforms, which are trying to redirect their marketing and logistics efforts to new markets.
Brazil also suffers side effects of the new tariff war
O Brazil, although it has not adopted a stance as aggressive as the United States, is already feeling the effects of trade war with China. Recently, the Brazilian government began taxing international purchases below US$50, which directly affected consumers who used platforms such as Temu and Shein.
As in the US, the official argument is the need to “balance the market” and generate revenue. However, there is pressure from the national retail sector and the industrial segment for stricter barriers to be applied to the entry of Chinese products with low declared value.
China's domestic economic crisis worsens with factory closures and mass layoffs
O Chinese growth model, supported by exports, low wages and a devalued currency, is encountering increasing resistance. The real estate crisis, added to trade tensions, makes the scenario even more challenging.
Recent reports show that entire factories are being shut down, warehouses are being abandoned with stocks of unfinished clothing and thousands of workers are being laid off. Small workshops and family businesses, which produced for brands like Shein, are the hardest hit.
According to local sources consulted by Bloomberg, many of these factories do not have enough capital to adapt to new logistics chains, such as a possible move to Vietnam or Bangladesh.
Donald Trump says he won't lift tariffs without substantial concessions from China
Former President Donald Trump, when asked about the measure, made it clear that tariffs will not be removed unless China offers significant compensation. “It would be great if they would open up their economy, but I don’t expect them to do that,” Trump told the American press.
Trump's strategy aims to expose the closed model of the Chinese economy, which for years benefited from massive exports with easy access to Western markets, without trade reciprocity. For him, it is time to balance the scales and demand more openness from Beijing.
The escalation of the trade war between the United States and China has a direct impact on the daily lives of consumers and business owners in several countries. Platforms such as Temu and Shein, once symbols of accessible e-commerce, are now facing drastic drops in revenue and uncertainty about their global operations.
With factories closing, workers being laid off and new tariff barriers emerging in Europe and Brazil, China’s direct-to-consumer shipping model may be nearing its end. And by all indications, the clash between Washington and Beijing is far from over. Shein: From Chinese warehouses to the top of global retail.
In the coming months, the world will watch to see whether China responds with new tariffs, seeks alternative logistics options or finally bows to pressure for trade reforms. Meanwhile, consumers and businesses adjust their strategies in the face of a new scenario for global trade.
