• President Trump lowered the tariffs on goods from China to 30%.
• Packages under $800 shipped directly to customers from China are still subject to high duties.
• But Temu has already started shifting to shipping from US warehouses — so this is still a win for the company.

Temu and Shein have just found themselves in a strange spot in the new 90-day reprieve in the trade war with China. President Trump has loosened the tariffs to 30% (down from 145%) as part of a plan to open the negotiations for a new trade deal.

However, high tariffs remain on small packages shipped directly from China — the kind that Temu and Shein typically send.

Until very recently, Temu and Shein benefited from the de minimis exception, a loophole that allowed for packages under $800 in value to ship without duty. Trump closed this loophole starting May 2. He also implemented tariffs as high as 120% or a flat fee of $100 per package (rising to $200 in June). Those remain in effect, despite the 90-day deal, Axios reported Monday.

But Temu had a workaround strategy that saved customers from having to add on massive extra "import charges" on orders. Temu had already been building up warehouses in the US, which meant that some items could ship locally (and more quickly).

A few weeks ago, Temu changed its site and app to display almost exclusively items that shipped from US warehouses — products that would avoid those nasty extra fees. At the time, Temu told Business Insider it also planned to work on recruiting more US-based sellers.

Of course, this was a temporary solution: eventually, those US warehouses would need to get restocked, and the new bulk shipments would be subject to Trump's 145% tariffs. When I wrote about this last week, I said that Temu had a few options: shift to focusing on Europe or other markets, or ship to the US from other countries.

But there was also one other viable option: wait it out and hope a trade deal happens soon.

So here's where Temu and Shein are now: the tariffs for shipping directly to customers from China are still onerous. That's bad for them.

The good news is that if, instead of shipping direct, suppliers ship big quantities to the companies' US warehouses, the situation is better.

That's because right now, Temu and Shein— which also has US warehouses — have extra time to replenish those local warehouses with the lower tariff charges. Temu, Shein, and the White House did not respond to requests for comment.

For Temu sellers, it isn't back to business as usual, but it is definitely good news. Here's what one seller told Bloomberg:

For Sun Yang, who owns a business selling face- and body-painting tools such as brushes and color palettes on Temu’s online marketplace, the good news couldn’t come soon enough as he watched his inventory dwindle at warehouses in the US, which accounts for all of his sales.

“Our whole office was shouting ‘hooray!’ when we read the news,” Sun said from his company’s headquarters in Shenzhen near Hong Kong.

Sun saw mid-double-digit sales growth in the past two months as American consumers hoarded products before prices skyrocketed.

“Returning to 30% means we have no pressure from price hikes in the foreseeable future,” said Sun, “I hope consumers can gain more confidence and come back to shop again.”

So what does this mean? Well, I can definitely say that, for now, this is great news for those little girls who want 30 dolls instead of just two. Temu and Shein have gotten yet another life.

• I love Temu, and so far, it's weathering the Trump tariff wars.
• I got my latest order just fine — with no extra fees — because Temu is shipping from US warehouses.
• But eventually, those warehouses are going to be empty. Then what happens? I asked experts.

If you haven't been following my Temu saga, let me catch you up: I (reluctantly, and with appropriate shame) love Temu! I was nervous after President Donald Trump ended the loophole that lets it ship me cheap junk from China. But then I got my latest order — with no problems, delays, or extra fees.

So does that mean my Temu habit is safe?

I talked to a couple of experts on world trade. They told me: Temu is probably safe for now, but over the long term, my relationship with Temu could come to a sad and screeching halt.

That's because right now, Temu is shipping everything that US customers buy from US warehouses. That means those orders — like my one last week for some children's birthday party favors — avoided the extra fees Trump slapped on orders coming from China.

But pretty soon, those US warehouses are going to run out of stuff. Then what happens? The experts I talked to said that's where things get tricky. Here are some potential outcomes:

• The US and China hammer out a trade agreement that lowers or ends tariffs, and Trump backpedals on his closing of the so-called de minimis loophole that allowed Temu — and Shein — to send stuff to the US directly from Chinese warehouses with no extra duties.
• Temu recruits companies to start storing millions of items in US warehouses to replenish the ones that will soon be empty.
• Temu somehow gets companies to make low-cost crap in countries aside from China that aren't subject to as high of tariffs. (So that squirt gun that used to be made outside Beijing might now be made outside Hanoi, Vietnam.)

Any of those things would be a huge change from how Temu does business now. It's a marketplace where sellers in China have warehouses full of stuff, and Temu is just the intermediary, acting as a showroom for those wares to American customers. After US customers fill up their baskets, the sellers send orders directly from their warehouses to the US — exploiting the de minimis loophole that eliminates duties for packages sent directly to customers that have a value under $800. (That's the loophole Trump closed.)

So getting a whole new army of sellers, this time in the US, would be a big lift. A Temu spokesperson said that's exactly what the company is doing — "actively recruiting US sellers to join the platform."

"The move is designed to help local merchants reach more customers and grow their businesses," the spokesperson told Business Insider. It's not clear how the sellers would source the items they would sell. If they were made in China and imported for sale in the US, presumably, the seller would still have to pay a tariff — even if the end customer avoided the de minimis fee.

And besides, I'm not sure US-based sellers would be able to offer the same ultralow prices that Chinese sellers do. (If they can't, shoppers like me might just head to Amazon.)

Temu will eventually run out of stuff in the US

Willy C. Shih, a professor at Harvard Business School who focuses on global supply chains and manufacturing, estimated that Temu might have enough stock to last through the summer, or a little beyond. "I've talked to some people who have enough inventory to last until the holiday season," he said. "But then, eventually, they have to replenish."

Yannis Bakos, an assistant professor at NYU's Stern School of Business who focuses on e-commerce, said Temu and Shein would eventually run out of runway — if tariffs didn't change.

"While some strategies may offer short-term relief, the long-term sustainability of their US operations is questionable if the tariffs remain," Bakos said. "If they try to increase prices and move upmarket, it would be hard for them to compete with Amazon, so their likely best option would be to focus on increasing their growth into other markets, such as Europe."

Already, Temu and Shein in April sharply boosted their advertising in Europe, Reuters reported. It said local downloads there of the ultracheap shopping apps had risen but that growth was slow.

Is this Temu's new normal?

Still, Shih speculated there's one last tactic for Temu — and for those who love it, like me: Wait it out.

Eventually, the US and China will likely make some sort of trade deal, and the blisteringly high tariffs may ease up. Will this happen anytime soon? It could be a risky move putting too much hope into this basket after Trump said little girls might need to live with just two dolls instead of 30 this Christmas.

After all, he might actually believe Americans need to break their culture of consumption. (How much you take that at face value is up to you.)

As for me? I got my latest Temu order cheap and quick. And what is more American than being satisfied with "I got mine?" What happens next time … I'm not sure.

• Temu is ceasing direct Chinese exports to the US, shifting to a local fulfillment model.
• The change follows the closure of a trade loophole allowing duty-free imports under $800.
• Higher prices are expected as import taxes may now apply to previously exempt goods.

The era of ultra-cheap goods shipped directly from China via Temu is coming to an end.

The e-commerce giant, which added "import charges" to customers' orders at the end of April, announced a dramatic overhaul of its US business model.

Temu is ceasing direct-from-China shipments in response to the federal government closing a long-standing trade loophole.

The "de minimis" exemption allowed packages valued under $800 to enter the US duty-free, a critical advantage Temu and competitor Shein exploited to offer cheap prices.

The exemption, born from a 1938 law meant to simplify customs, became a linchpin of modern e-commerce logistics. Its $800 threshold fueled an explosion of small packages flooding US ports, accounting for the vast majority of import entries, according to CBP data.

Washington moved to close the loophole under the Trump administration, with the two-pronged goal of cracking down on illicit shipments like fentanyl smuggled in small packages and creating fairer competition for American retailers burdened by tariffs bypassed by foreign shippers.

Similar concerns about the rule's exploitation were previously flagged by the Biden administration.

In a statement shared with Business Insider, the company said: "Temu's pricing for US consumers remains unchanged as the platform transitions to a local fulfilment model. All sales in the US are now handled by locally based sellers, with orders fulfilled from within the country.

"The move is designed to help local merchants reach more customers and grow their businesses. This shift is part of Temu's ongoing adjustments to improve service levels."

The impact on consumers is expected to be direct: higher prices.

Goods once exempt could now be hit with hefty import taxes or fees, potentially starting at $100 or based on percentages exceeding 100% of the value. Policy watchers have consistently warned that these new costs would likely be passed on to shoppers.

Besides the cost, officials said the huge number of these packages overwhelmed customs workers and strained inspection resources.

The UK and EU are both considering similar policy shifts, which could prompt a hike in prices in Europe soon.

• Temu is now adding a hefty "import fee" to orders that ship from China. It's often more than the orders themselves.
• But Temu also has tons of "local warehouse" items already in the US that avoid the fees.
• The site is surfacing these local items in search and recommendations.

When I placed a Temu order last month, I thought it would be my last hurrah — a final order before new fees and tariffs took hold. But it turns out, Temu has local warehouses in the US — and I was able to order again on Tuesday with no extra fees.

I made my last order on the day President Donald Trump announced his plans to close the "de minimis" loophole that allowed Temu and Shein to ship to the US without paying duty fees. I also got in under the wire before significant tariffs for Chinese-made goods hit.

I waited with baited breath to see if my order — some cheap battery-powered bubble wands — would arrive safely and without any extra duty fees (it did).

Since then, starting earlier this week, Temu has started adding a line item at checkout for an "import charge" in addition to shipping or the cost of merchandise on some orders.

When I checked on Tuesday — looking at some items I had left in my cart last month but didn't buy — the import fee was higher than the total cost of the merchandise. Basically, it made my Temu haul a terrible deal — higher overall costs than buying similar items at a regular store.

I thought this would mean curtains for Temu, the death knell. No one would be willing to pay these exorbitant extra fees — only someone who accidentally didn't notice it at checkout might (and then get really mad later).

But it turns out that's not exactly what's happening. Temu has 4D chess'd Trump's tariffs in a way.

For a while now, Temu and Shein have been setting up local warehouses in the US. Previously, these were an option that would be flagged to shoppers as offering faster shipping.

Stuff that is shipping within the US doesn't need to take on that extra "import fee" — that's only for packages shipping from China.

Presumably, the stuff in the local warehouses has already been in the country for a while, so for now, it isn't affected by the other tariffs for goods made in China that will eventually be shipped here.

Temu is very aggressively prioritizing the "local warehouse" items on its app and website. (Temu didn't immediately respond to a request for comment on its strategy.)

When you search for an item — I was looking for decorations and party favors for my daughter's birthday — the top results (in fact, the entire page of results) are all from local warehouses. On product category pages for home goods, toys, and women's clothing, all the results for at least two pages were local warehouse items.

In fact, it was actually hard to browse for something that wasn't shipped locally.

Basically, Temu has very quickly shifted its entire storefront for US customers to show them almost exclusively local results — the kinds of items that don't require import fees.

It's hard to tell whether the actual prices on those might be slightly higher than before things changed with Trump's new policies. Temu is a marketplace with lots of sellers, so often, you might find items that look nearly identical selling at slightly different prices. The bubble toy I ordered in March cost $4.22 but is no longer available from that seller; a similar version shipping locally is listed at  $7.61. (For comparison, Amazon sells a two-pack of the toy for around $16.)

What does this mean for shopping from Temu?

For the short term, Temu customers will mostly avoid getting slammed with massive fees, it appears. But long-term, I'd guess prices will probably go up — those local warehouses will need to restock with merchandise from China, which will be subject to tariffs.

Still, Temu's competitors for cheap household goods, toys, and apparel will also be feeling that same squeeze from tariffs. And by then? Who knows what will happen? Maybe my love affair with Temu isn't over after all.

• I've been tracking my latest order from Temu. It finally arrived — with no extra fees.
• But starting soon, because of the expected ending of a shipping loophole, there may be new fees.
• Temu and Shein have said they're raising prices.

Sure, the national hardship of price increases tied to tariffs is only getting started. But my personal journey of stressing about a recent Temu order? Phew, that's done! Our nation can breathe a sigh of relief.

To catch you up on my harrowing personal drama: The night before "Liberation Day," I placed a farewell order from Temu, the e-commerce marketplace that ships orders (mostly) directly from China.

Aside from enacting tariffs, Donald Trump has also said he would end the de minimis loophole that has allowed Temu, Shein, and others to ship orders with values under $800 directly from China to customers in the US without paying duty fees. That loophole has been the underpinning of Temu and Shein's astonishingly low prices on clothing and knickknacks.

The details about closing the de minimis rule have been a little unclear at times — not unlike the back-and-forth with Trump's tariffs. Initially, it was unclear when the yanking of the de minimis exception would go into effect, and I worried that when my order arrived, I might get slapped with a hefty $75 fee.

Now it seems that the de minimis loophole closes on May 2, which means that a few last shipments — including my own — have been able to sneak in under the wire.

I got three bubble machine/bubble wand items.

Temu and Shein have both put up statements on their websites addressing customers to warn them that price increases will hit soon.

What's kind of odd is that both sites, which are owned by different parent companies, had the same message, worded exactly the same — only the company name at the end is different. (Temu and Shein didn't comment.)

The statements say:

Dear Customers,

Thank you for your continued support. Since we began serving U.S. shoppers, our goal has been simple: to offer great product/fashion at affordable prices while creating positive impact in the communities we serve.

Due to recent changes in global trade rules and tariffs, our operating expenses have gone up. To keep offering the products you love without compromising on quality, we will be making price adjustment starting April 25, 2025.

Until April 25, prices will stay the same, so you can shop now at today's rates. We've stocked up and stand ready to make sure your orders arrive smoothly during this time.

We're doing everything we can to keep prices low and minimize the impact on you. Our team is working extra hard to improve efficiency and stay true to our mission: to offer great product/fashion at affordable prices for everyone.

Thank you again for being part of the [TEMU/SHEIN] family.

With gratitude,
The [TEMU/SHEIN] Team

So, there we have it. I made out just fine. And if you order in the next few days, you might be fine, too. After that, well, you're screwed — either higher prices or a big duty tax bill, or even both!

Will I enjoy my bubble machine knowing it may be the last sweet, sweet duty-free shipment of bargain-basement plastic junk? Yes, yes I will. But will I feel good about pulling off this last-minute near-heist? No, no I won't. I don't feel good about any of this.

Popular online shopping meccas Temu and Shein have finally broken their silence, warning of potential price hikes starting next week due to Donald Trump's tariffs.

Temu is a China-based e-commerce platform that has grown as popular as Amazon for global shoppers making cross-border purchases, according to 2024 Statista data. Its tagline, "Shop like a billionaire," is inextricably linked to the affordability of items on its platform. And although Shein—which vows to make global fashion "accessible to all" by selling inexpensive stylish clothing—moved its headquarters from China to Singapore in 2022, most of its products are still controversially manufactured in China, the BBC reported.

For weeks, the US-China trade war has seen both sides spiking tariffs. In the US, the White House last night crunched the numbers and confirmed that China now faces tariffs of up to 245 percent, The Wall Street Journal reported. That figure includes new tariffs Trump has imposed, taxing all Chinese goods by 145 percent, as well as prior 100 percent tariffs lobbed by the Biden administration that are still in effect on EVs and Chinese syringes.

Read full article

Comments

• Shein and Temu said they would raise prices for their products from April 25.
• The retailers said the price hikes were due to "recent changes in global trade rules and tariffs."
• They promised their US customers eight final days of low-price shopping.

Bad news for discount-loving fans of Shein and Temu — both announced on Wednesday that they plan to hike prices.

The two Chinese retailers released almost identical notices on Wednesday, which both read: "Due to recent changes in global trade rules and tariffs, our operating expenses have gone up."

"To keep offering the products you love without compromising on quality, we will be making price adjustments starting April 25, 2025," Shein's statement said.

President Donald Trump last week imposed a 145% tariff on goods from China. Beijing retaliated with its own 125% tariff on US-made goods.

Both Shein and Temu promised their US customers eight final days of low-price shopping.

"Until April 25, prices will stay the same, so you can shop now at today's rates. We've stocked up and stand ready to make sure your orders arrive smoothly during this time," Temu's statement read.

Shein, a budget fashion retailer known for its massive garment production, and Temu, a low-cost marketplace selling everything from home goods to electronics, have been in Trump's direct line of fire since he entered office.

The president has cracked down on the de minimis trade loophole that allowed small parcels under $800 to enter the US tax-free. Shein and Temu were large beneficiaries of this loophole.

On April 9, he issued an executive order imposing a 120% tax on small parcels under $800 from China, Hong Kong, and Macau.

The order added that per-item postal fees for these parcels would increase to $100 between May 2 and June 1 and to $200 after June 1.

On Wednesday, Hong Kong's postal service announced that it would temporarily halt the delivery of goods from the US, as well as goods from Hong Kong destined for the US.

In a Tuesday press release, Hongkong Post said the suspension was triggered by the US being "unreasonable, bullying, and imposing tariffs abusively."

Representatives for Shein and Temu did not respond to requests for comment from Business Insider.

• I placed an order at Temu just before "Liberation Day" tariffs were announced — as a last hurrah.
• Since then, there's been a lot of on-again, off-again tariff news.
• Will I get walloped with a $75 duty fee on my $8 order? Pray for me!

The past few days with tariffs have been an emotional roller coaster. Not because I checked my 401(k), but because I placed an order from Temu last week — and its fate seems to be hanging in the balance.

In anticipation of "Liberation Day," when tariffs would go into effect, I placed one last Temu order. I figured it might be my final chance to get ridiculously low-priced plastic junk shipped straight from China through the mail (plus, I have a kid's birthday coming up, and I was in the market for some new bubble machine toys).

I snuck in my order just under the wire — and the next day, tariffs shocked the stock market. (Since then, there have been a few other shocks, like on Wednesday when Donald Trump delayed most tariffs for 90 days, except on China.)

Temu's business isn't like say, Apple's, where tariffs could affect the importing to the US of an internationally-made iPhone. Temu ships orders to customers directly from China, using the "de minimis" exception — a longtime loophole that had allowed packages with a value under $800 to be mailed to the US without being subject to duties.

Trump signed an executive order last week ending the de minimis exception. That means packages coming into the US are expected to be subject to a duty, even if their value is under $800.

His initial order meant that these Temu-type packages (ones that would have previously been de minimis) would now be subject to a $25 fee per item, or a fee of 30% of their value. (It's unclear if you'd have to pay the higher or lower of those two options.)

But this week, Trump tripled down — now it's $75 per item or 90% of an order's value.

What do Trump's moves mean for my Temu order?

Yikes. That makes my $8 bubble camera turn into a pretty bad deal.

Thankfully, this all is expected to go into effect starting on May 2nd, and my package is expected to arrive before then. I know, I know, you're practically weeping with relief for me.

According to Temu's website, my order has cleared customs and is on its way — with an estimated delivery window of April 10-17.

What does this all mean for Temu's business — and the business of Shein, a Chinese company that also has used the de minimis exception? Well, it's not looking great, I'll say that.

Temu is running a "Temu Week" promotion at the top of its site and app, which it's done before to compete with Amazon's Prime Week. (It wasn't immediately clear if prices were lower on certain items as part of Temu Week.) I asked Temu if this was an already-scheduled promotion or if it was in response to the tariffs, and I didn't get a response.

Temu has already been diversifying its shipping supply lines, with local warehouses in the US that would theoretically neutralize the loss of the de minimis loophole. But now, with these new heavy tariffs, items being shipped into the warehouse from China would likely be hit with the charges.

Based on how quickly things have changed over the last week, it's hard to guess exactly what this will mean long-term, either for a $5 gizmo from Temu or a $1,000 iPhone.

My advice? You've got a few days left to order worry-free from Temu before you come close to that May 2 deadline. Do as your conscience sees fit.

• In anticipation of tariffs, I made a hasty last-minute panic buy at Temu.
• Donald Trump has said he'll close the loophole that lets Temu and Shein ship directly to customers without duties.
• Will American consumers like me be able to break their addiction to cheap foreign goods? Who knows!

Last night, as "Liberation Day" was taking effect and the tariffs on imports were being revealed, I did what any American might do in a crisis: I panic-shopped.

I hit up what I thought might be most likely to go extinct: the sweet, sweet low prices on fast fashion and junky plastic that comes straight from China. So, as I read over tweets that were speculating that the tariff rates were determined by ChatGPT, I went onto Temu and frantically placed an order. One last hurrah.

As I placed an order for several bubble wands and machines (I have a child's birthday coming up, so this was a somewhat intentional shop, admittedly), I couldn't help but wonder: Wow, is this it?

Will this be the end of a $2.74 mousepad that leaks goo all over me (which happened with an actual mousepad I bought from Temu)?

Is this the end of kids making fun of their parents for becoming "Temu victims?"

Is this the end of Temu being used as a new slang insult?

Right now, I'm not sure.

I checked the prices of the items I bought late Wednesday again on Thursday morning, post-tariff announcement. (It's not clear when exactly each tariff will start to take effect.) So far, no change in prices. The Temu website had no pop-ups or banners or warnings that prices might change due to the new tariffs.

Temu is in a bit of a unique position compared to other consumer goods you might buy that were made in China. Temu and fast-fashion retailer Shein's whole business is shipping your order directly from China, using the de minimus exemption — an old law that allows items under $800 to be shipped to the US duty-free.

Basically, if Walmart imports T-shirts made in China, it has to pay tariffs, which will likely be passed onto me in the price tag when I buy one at the store. But if I order a single T-shirt from Shein, it ships directly to me with no duty taxes at all — which is one of the ways Temu and Shein were able to keep prices so low.

So, you might think that Temu would be uniquely spared from the tariffs. But Trump just signed an executive order that would close that de miminis loophole, and add on either a 30% duty or a flat $25 fee (which would go up to $50 by June 1).

The White House's official announcement of the order, which is set to go into effect May 2, says that this is to stop the flow of illegal synthetic opioids like fentanyl that are shipping into the US from China through the mail. I don't know all that much about the illegal drug trade, but I always assumed the margins are fairly healthy; it may be an industry able to absorb a tariff.

Hopefully, my Temu order will arrive before May, and I'll have been able to sneak under the wire with my last reckless sprint of consumerist impulse. Am I proud of this? Absolutely not. Trust me, I feel as bad as I should.

(The announcement from the White House was rough for Temu's parent company, PPD Holdings, and others, like Alibaba, whose stocks plummeted on Thursday.)

I have no idea what will happen with Temu and Shein or other retailers that have transformed their industries in the last few years by offering unbeatable prices. Will consumers finally kick their habit of hyperconsumption? Will it put these companies out of business if shoppers have to pay big duty fees? No clue!

Right now, we're in a weird moment where it's not totally clear what's going to happen (although it seems … probably "bad.") I only tell you how I feel:

• Forever 21 is now navigating its second bankruptcy in five years.
• The brand was known for limited-run collections that turned the typical apparel cycle on its head.
• It also laid the groundwork for brands like Temu and Shein, which won over much of its business.

Forever 21, the once iconic fast fashion mainstay of shopping malls, is now navigating its second bankruptcy in five years, as rising costs and new competition have led to several years of financial losses.

For decades, the brand was a popular choice for budget-minded shoppers, offering limited-run collections that turned the typical apparel cycle on its head.

Forever 21 was once one of the fastest-growing fashion retailers in the world, laying the groundwork for brands like Temu and Shein, which the company later cited as threats to its existence.

Here's a look back at the rise and fall of Forever 21.

The company was founded in 1984 by married couple Jin Sook and Do Won "Don" Chang in Los Angeles.

The couple arrived three years earlier from South Korea with basically no money, no degrees, and nearly no English.

Jin Sook worked as a hairdresser while Don worked as a janitor, pumped gas, and served coffee.

Don said he noticed that the nicest cars were driven by people in the garment business.

Originally called Fashion 21, the Changs' first location in 1984 was a 900-square-foot clothing store they opened with $11,000 in savings.

The store made $700,000 in sales in its first year.

Soon the Changs were opening a new location every six months.

They also rebranded as Forever 21, saying that he store was "for anyone who wants to be trendy, fresh and young in spirit."

The company pioneered the concept of "fast fashion" to stay on-trend.

Jin Sook eventually approved more than 400 designs a day, some of which got the company into trouble with other brands.

By 2015, Forever 21 had 480 US stores and $4.4 billion in global sales.

The Changs became one of America's wealthiest couples, with a combined net worth reaching an estimated $5.9 billion in March 2015.

A goal of 600 worldwide stores and $8 billion in sales by 2017 proved too lofty.

As the company focused on growth, some of its styles became more predictable, while competitors like H&M and Zara gained market share. An executive later said that opening stores in 47 countries in less than six years introduced a lot of "complexity" to the business.

Competition from e-commerce brands also started to eat away at sales.

Brands like Fashion Nova began churning out styles, not to mention the rising influence of Amazon.

Some designs and partnerships didn't exactly help the brand stay relevant with young shoppers, either.

Some social media users have mocked some of its recent designs over the last 6 years, including some from Cheetos, Top Ramen, and the United States Postal Service, as driving Forever 21's financial troubles.

Burdened by $500 million in debt, the company filed for bankruptcy for the first time in 2019.

"Filing for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future," the company said at the time.

In 2020 — just before the pandemic — Forever 21 reached a deal.

A strategic partnership between Authentic Brands Group and two shopping center owners, Simon and Brookfield, was intended to revitalize the mall-rat-favorite brand.

Brookfield later sold its stake.

The pandemic brought a litany of new headaches — namely inflation and supply chain challenges.

Although the company enjoyed a period of success following the bankruptcy sale, it later said things have deteriorated since 2021.

New competitors, like Shein and Temu, also turbocharged the fast fashion game.

Under a trade rule known as the "de minimis" exemption, e-commerce retailers can ship packages worth less than $800 to the US from overseas without paying a tariff, passing some of the savings along in the form of lower prices.

In March, Forever 21 once again filed for bankruptcy.

The company blamed the "de minimis" rule for partly undercutting its ability to compete on price with "non-US online retailers."

The financial hole has gotten steep, with more than $550 million in losses over the past four years, per the company's filings.

The company now plans to close several underperforming stores as it looks for a buyer to keep the brand alive, albeit likely at a fraction of its peak scale and cultural influence.

Forever 21's future is far from certain, but one possibility is that it could live on as an e-commerce brand.

"This would make Forever 21 a shadow of its former self, but a sale is possible as e-commerce and brand groups may show some interest," GlobalData retail analyst Neil Saunders said in a note.

Other former titans of 20th Century retail, like Bed Bath & Beyond, have previously shed their prior physical presence for an online-only brand that capitalizes on the loyalty and recognition of the original.

• Forever 21 just filed for its second bankruptcy in five years.
• The former icon of American fast fashion partly blamed its troubles on Shein and Temu.
• In particular, the company said the "de minimis" exemption gives it a disadvantage with tariffs.

Forever 21 is navigating its second bankruptcy in five years, but this time around it has a new problem.

For decades, the mainstay of American shopping centers was a fast fashion icon, featuring branded collaborations with everyone from Cheetos to the United States Postal Service.

But now the company faces fresh challenges, beyond the decline of shopping malls and rising costs. Specifically, it's partly blaming Chinese e-commerce and a foreign trade rule regarding small shipments that has gotten a lot of attention this year.

"The Debtors' business has been materially and negatively impacted by the ability for online retailers to take advantage of the 'de minimis exemption' which exempts goods valued under $800 from import duties and tariffs," F21's co-chief restructuring officer Stephen Coulombe wrote in a court filing Sunday.

The "de minimis" rule to which Coulombe is referring allows smaller parcels to enter the country without a tariff — for example, a low-cost phone case or a $20 dress.

By sending a lot of small packages directly to US shoppers, some foreign e-commerce retailers are able to avoid paying tariffs that would otherwise apply if that same merchandise arrived via a larger, more expensive shipment to be later packed and delivered (or sold in stores).

An estimated 1.4 billion shipments arrived in the US under the exemption last year, according to US Customs and Border Protection.

"Certain non-U.S. online retailers that compete with the Debtors, such as Temu and Shein, have taken advantage of this exemption and, therefore, have been able to pass significant savings onto consumers," Coulombe added.

The world got a vivid picture of how this "de minimis" rule works back in February when President Donald Trump ended the exemption, quickly causing a backlog of packages that needed US recipients to pay a tariff on. Trump soon reversed course.

Forever 21's bankruptcy statement is a remarkable one for a US retailer to make, as Business Insider Emily Stewart noted last month.

"Most retailers don't outright say that Shein and Temu are a problem for them," she wrote. "It's not a great look to admit that you're hemorrhaging customers because you can't compete with e-commerce companies selling the lowest-quality, lowest-priced versions of everything you make."

• Sales for Shein and Temu slowed after Trump announced tariffs and de minimis changes.
• Shein's sales growth dropped significantly.
• The de minimis loophole remains open — for now.

Shein and Temu's sales slowed in the weeks after Trump announced tariffs and said he would close the de minimis loophole, February data from Earnest Analytics showed.

Shein seemed to take more of a hit than Temu. Between the weeks that ended February 1 and February 22, its sales growth slowed from 22% year over year to 9.6% year over year.

Temu's sales also decelerated, though at a slower rate, from 15.4% to 14.4%, which Earnest's head of marketing, Michael Maloof, said was in line with its usual weekly fluctuations. Earnest analyzes debit and credit card transactions from millions of US consumers.

By the week of March 1, Shein's sales growth was back up to 21.4% year over year.

The ups and downs demonstrate how closely US consumers are watching the news cycle — and could be a preview of what's to come when the Trump administration ends de minimis shipping for good.

"Nothing materially changed from an import perspective for Temu and Shein during February, and yet customers made fewer transactions during that period," Maloof told Business Insider. "The later recovery suggests this pullback could have been more news-driven than fundamentals-driven."

Representatives for Temu and Shein did not return a request for comment from BI.

The weeks when Shein's sales decelerated coincided with a series of whiplash moves in global trade.

In early February, Trump issued an executive order closing the de minimis loophole while imposing tariffs on China, Canada, and Mexico. (The administration has since rescinded some of the tariffs on Canada and Mexico). De minimis, also known as Section 321, is a provision of US customs law that allows retailers to import goods duty-free as long as they are valued at less than $800 and sent directly to customers.

The announcement that de minimis shipping would no longer be allowed sent much of the retail world into chaos. While Shein and Temu's use of de minimis brought the provision into the mainstream, many other brands selling directly to consumers also use the loophole to find cost savings.

US Customs and Border Protection said in a January press release that de minimis shipments increased by more than 600% from fiscal year 2015 to fiscal year 2023, going from 139 million a year to more than 1 billion. More than 1.36 billion shipments were sent via de minimis in fiscal year 2024, according to CBP.

Just a few days after the executive order was issued, Trump issued a follow-up order saying that the loophole would remain open until customs officials could establish a new process for collecting duty on packages sent using the provision.

Logistics experts expect de minimis to go away soon, though the exact timing is still unclear.

Have a tip? Contact this reporter via email at [email protected] or Signal at @mlstone.04. Use a personal email address and a nonwork device; here's our guide to sharing information securely.

• Shein and Temu benefit from Trump's pause on ending the de minimis exemption — for now.
• The de minimis exemption allows duty-free imports under $800.
• Meanwhile, many companies that source their products from China are now paying tariffs.

Shein and Temu scored a win thanks to President Donald Trump. As tariffs are hitting retailers and forcing some to raise their prices, both companies are still able to use the de minimis exemption after the Trump administration temporarily paused its plan to eliminate it.

Both companies are doubly advantaged over some of their competitors — at least for now. Many businesses that manufacture their goods in China are now paying extra in tariffs, while de minimis allows companies like Temu and Shein to import low-cost items without paying any kind of duty.

"Everyone will be paying them except for Temu and Shein. (For now; we know de minimis is going away in the future,)" Marketplace Pulse founder Juozas Kaziukėnas said in a LinkedIn post. "Bizarrely, Temu and Shein never had it better."

Neither company responded to a request for comment from Business Insider.

In early February, Trump announced that he would simultaneously impose tariffs on Mexican, Canadian, and Chinese products and end the de minimis exemption, which allowed retailers to import goods duty-free as long as they were valued at less than $800 and being sent directly to customers.

But just a few days later, Trump issued another executive order that said de minimis — also known as Section 321 — would remain in place until customs officials could establish a new process for collecting duty on packages sent using the provision.

Meanwhile, the 20% tariffs on Chinese goods have gone ahead. (Trump temporarily paused the 25% tariffs on Mexican and Canadian goods on Thursday, saying they would be on hold until April 2.) That means that even if an item would have been subject to a tariff, importers do not currently have to pay that tariff if they are shipped via de minimis.

One reason that lawmakers have advocated for the repeal of de minimis in recent years is that it's difficult for American businesses to compete with companies using de minimis to save money. They also have argued that de minimis allows for the import of illicit goods like fentanyl — an argument that Trump has echoed in executive orders.

"The fact that we are immediately penalizing US businesses who manufacture offshore while providing this continued advantage to Chinese marketplaces such as Temu and Shein makes zero sense," Matthew Hertz, founder of the third-party logistics platform Third Person, said to BI.

He wrote on LinkedIn: "There is currently 0% tariffs on individual parcels entering the U.S. from anywhere, so long as values < $800. Even if it's a high-tariff item from China."

Logistics experts expect de minimis to go away, but it's not clear when.

Shein and Temu prepared for the end of de minimis by diversifying their supply chain and fulfilling more of their orders in the US. Both e-commerce companies have previously said they do not rely on de minimis to grow. Industry experts told BI in February that the companies' true advantage lies in their ultra-low prices and, in Shein's case, an ability to manufacture very trendy items in a short period of time.

The Chinese e-commerce disruptors are also not the only companies to use the de minimis exemption. US Customs and Border Protection said in a January press release that de minimis shipments increased by more than 600% from fiscal year 2015 to fiscal year 2023, going from 139 million a year to more than 1 billion. More than 1.36 billion shipments were sent via de minimis in fiscal year 2024, according to CBP.

The announcement that de minimis would be repealed — and then the sudden reversal of that announcement — left many businesses that sell cross-border into the US struggling to plan. With no clear timeline on when de minimis will be officially gone, they now have a bit more time to do so.

Have a tip? Contact this reporter via email at [email protected] or Signal at @mlstone.04. Use a personal email address and a nonwork device; here's our guide to sharing information securely.

One of America's greatest love affairs is with cheap stuff. Yes, consumers generally want things to come fast, and sure, they'd like them to be of decent quality — but above all, what they really care about is the price tag.

Many retailers understand this obsession and are eager to cater to price-sensitive customers. But serving this desire does not guarantee success: The single-minded focus on price means that often we can be pretty disloyal about where our cheap stuff comes from. And in a race to the bottom, there's always someone willing to go lower. At the moment, that's the Chinese online retailers Temu and Shein, whose rock-bottom prices are proving almost impossible to beat for American companies.

Some formerly hot big-name retailers have had a tough go of it as of late. Liberated Brands — the operator of the beloved millennial brands Billabong, Quiksilver, and Volcom — filed for bankruptcy in February and said it would close all its US locations. The fast-fashion retailer Forever 21 is reportedly mulling filing for bankruptcy for the second time in five years. According to the research and advisory firm Coresight, major US retailers announced 7,325 store closures in 2024, up by 33% from 2023 and the highest number since 2020. The bloodbath has continued into 2025: More than 3,000 store closures have already been announced this year. Names such as Big Lots, Party City, Joann, Kohl's, Dollar Tree, and Macy's are shuttering locations. And it's not just physical retailers that are struggling — shares of the online retailer Etsy tumbled after it reported disappointing sales numbers during the holiday season.

When a retailer is having a hard time, it's usually for a multitude of reasons — poor management, a declining brand, changing consumer tastes, etc. But in many of these cases, one quite new factor is contributing to their troubles: supercheap Shein and Temu, which are increasingly hard to contend with. Many American consumers love to cycle through stuff rapidly and thoughtlessly, and the Chinese retailers let them do that in an unrivaled manner.

"What they've done that hurts the competition the most is compete so strongly on price that, yes, it makes it very difficult for anyone else to compete in that way without losing that money," said Sky Canaves, a principal analyst of retail and e-commerce at EMARKETER. "It puts other retailers on the back foot."

In the realm of cheap stuff, there's no such thing as cheap enough.

Liberated Brands has blamed several factors for its bankruptcy, including inflation and a volatile economy, but inexpensive online retailers are also contributing to its woes. In a sworn declaration accompanying the company's bankruptcy filing, its CEO, Todd Hymel, said the company had faced challenges from "shifting consumer preferences" toward fast fashion and e-commerce that harmed its pricing power and profitability.

"Consumers can cheaply, quickly, and easily order low-quality clothing garments from fast fashion powerhouses and have such goods delivered within days," he said. "These fast-fashion companies can cater to micro-trends as opposed to the traditional seasonal trend-forecasting retail model."

Forever 21 finds itself in a similar position, struggling to contend with Chinese e-commerce companies that can undercut it on price and are relatively indistinguishable, quality-wise. (You probably can't tell if a dress was from Shein or Forever 21 without looking at the tag.) In 2023, Forever 21 announced a partnership with Shein in an "if you can't beat 'em, join 'em" move. But apparently, even that hasn't been enough. For its part, Etsy made its name as a marketplace for personalized, handcrafted items from tiny creators. In recent years, though, it has expanded into offering inexpensive mass-produced goods in an effort to keep up. The problem is that whatever T-shirt you can get printed off Etsy for cheap you can probably find on Temu (or Amazon) for even cheaper.

Liberated pointed to a press release about its bankruptcy filing and otherwise declined to comment for this story. Forever 21, Shein, and Temu did not respond to requests for comment. Etsy declined to comment.

Most retailers don't outright say that Shein and Temu are a problem for them. It's not a great look to admit that you're hemorrhaging customers because you can't compete with e-commerce companies selling the lowest-quality, lowest-priced versions of everything you make. But if you read between the lines, the issue is present.

"Retailers sometimes are talking about consumer behaviors or cautious spending, and we think some of the siphoning off of sales to Shein and Temu is getting bundled up in the overall narrative of consumer caution," said John Mercer, the head of global research at Coresight. "Yeah, there's been some caution, totally, but some of what companies are reporting under that could be losing sales to Shein and Temu."

Coresight has estimated that Shein and Temu may be a $100 billion threat to traditional retailers.

Shein and Temu mostly employ well-trodden tactics from other retailers and push them to the limit in ways other companies can't. Instead of American companies manufacturing their stuff in China and shipping it over to the US, they decided to cut in on the action by making and shipping stuff themselves. The more direct supply chain allowed Shein and Temu to get agile and efficient enough to feed the American consumerist beast.

"You have to appreciate the fact that China for decades was always known as the country that merely manufactured products for other retailers," said Brittain Ladd, a retail and supply-chain consultant. "Shein and Temu, what they did is they researched retail in the US and Europe and so forth, and what they determined is we can do better. We actually can take what makes us special, our capabilities and manufacturing and supply chains and low-cost sourcing, all of that, and we can create business models where we can beat the best retailers in the United States."

Shein, which has been around since 2008, can quickly identify fashion trends and get them marketed, produced, and shipped to consumers' doors. The garments may take longer to arrive than if they came from Amazon, but the price makes them appealing. Temu, a newer entrant that sells items well beyond clothes, has the benefit of a monster parent company, the Chinese giant PDD Holdings, that allows it to set super-low prices that essentially no other retailer can stomach. It's not all that different from what Amazon did when it started out, losing money on e-commerce to get customers.

"They're backed by a very deep-pocketed parent company that is willing to lose money for a sustained period of time to gain market share in the US and elsewhere in the world," Canaves said. "It's a very aggressive strategy."

Now, I know what you might be thinking here: What about Trump and the tariffs and all this talk of taking on China? Shein and Temu have a plan for that — or at least they may not have to worry too too much.

Historically, Shein and Temu have been able to take advantage of a tax loophole that allows importers to avoid paying duties and taxes on shipments worth less than $800, known as the "de minimis" exemption. (Because what they sell is so inexpensive, it's tough to get to $800 in a single order, so they can put a bunch of orders together, too.) For some context, nearly 1.4 billion shipments entered the US through the de minimis exemption last year. Early in his term, President Donald Trump signed an executive order trying to close that loophole. Shein and Temu were prepared and had already been fulfilling more orders from the US and building up inventory stateside. Still, the executive order caused so much chaos at ports that it was put on pause. If the pause is lifted, the scenario won't be ideal for Shein and Temu, but it won't be a killer either.

"They're just simply storing the inventory in the US, just like other retailers do," Ladd said. "And even though that's a higher-cost methodology, it still allows them to sell their products at a price point much cheaper than anyone else."

It's a similar story with the 10% tariff Trump has imposed on goods from China. It's not great for Temu and Shein, but it's also well below the 60% Trump was floating on the campaign trail. It's relatively easy to pass some of that increase on to customers, and since plenty of their competitors import from China, too, they can keep their relative price advantage.

"Shein and Temu are rock bottom of the market," Mercer said. "If the whole market is rising in price, you can put your price up and still be rock bottom."

Some retailers have been able to ward off the Shein and Temu threat. Walmart and Amazon may not be able to go as low on prices, but they also offer things the Chinese e-commerce companies don't: faster delivery, groceries, different products. In November, Amazon launched Haul, a section of its app that, ironically, looks and works like a knockoff Temu. Other retailers at risk of going the way of Billabong or Forever 21 have managed to reinvent themselves and retain relevance, such as Gap and Abercrombie.

"You're not going to be able to outcompete Shein or Temu on price, so you have to build that almost emotional relationship with" customers, Mercer said. "You have to stand for more than low prices."

Ladd added, "Retailers go out of business because they lose relevance with customers."

Not to let flailing retailers off the hook here, but they're not dealing with the easiest of circumstances. Inflation has been a problem. The economy is unstable. It's not clear what tariffs and trade conflicts will mean for the retail industry. They're also managing a price-obsessed American consumer who's easily lured away.

We're attracted to cheap stuff not because of its quality but because it has a low enough price that allows us to constantly churn through the stuff, said Wendy Woloson, a history professor at Rutgers University who wrote "Crap: A History of Cheap Stuff in America."

"We don't have to make commitments to the things around us because if they're cheap enough and if they're available enough, then I can always buy something else," Woloson said.

When the barrier to entry is so low, there's no significant consequence of consuming like this. Hate that mousepad you got on Temu? Who cares; it was $2.74. Woloson noted that some people can't afford to buy something nicer, but even if everyone could, it's not clear they would. We live in an era of flash fads. People don't want a $200 pair of jeans that'll last for a decade — they want a $20 pair they can toss when the next trend cycles through.

"I think we're really bored," Woloson said.

At the moment, Shein and Temu are winning a race to satiate the insatiable American consumer, and they're undercutting retailers big and small in the process.

Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.

• Some fashion brands are pausing influencer campaigns and blaming US tariffs.
• Halara and Shein have temporarily halted some campaigns.
• The moves came after Trump announced new tariffs on China, Canada, and Mexico.

The trade wars have hit the influencer economy.

Halara, a women's activewear brand, said it was pausing some sponsorship campaigns until March, citing concerns about the business impact of new US tariffs, per an email sent to a talent manager and viewed by Business Insider.

The fast-fashion retailer Shein informed one talent manager through an agency that it was temporarily pausing collaborative videos. It told another it was deferring new campaign offers, saying the move was specific to creators with US audiences. In both instances, the company cited the US tariffs as the reason for its pause.

The talent managers spoke on the condition of anonymity to protect their future business dealings. Their identities are known to BI.

Fashion brands that rely on Chinese manufacturing are some of the first to be affected by President Donald Trump's tariff policies.

In its email, Halara said it would spend the next few weeks changing its warehouse strategy to adapt to US tariff policies. The company advised its influencers not to shoot any videos before March, as the products they're meant to promote may change by that point.

Halara and Shein did not respond to requests for comment from BI.

Whether the pause affects some or all of the brands' US influencer-marketing spending was unclear.

Halara, founded in 2020 by Joyce Zhang, has leaned heavily on social media and influencers to build its business. The company has a big presence on TikTok; it has sold about 125,000 items through the app's e-commerce feature, Shop. The company runs an ambassador program for influencers and offers affiliate commissions to creators who boost sales.

Shein similarly leans on creators to drive up sales, sponsoring influencer trips and running an affiliate program offering up to 20% commissions.

Trump, in a February 1 executive order, imposed an additional 10% tariff on all Chinese goods and a 25% tariff on items from Canada and Mexico. Tariffs on the latter two countries have been paused.

Trump's order also removed a tax loophole known as the de minimis exemption that allowed brands like Shein and Temu to cheaply send goods to US consumers from China. Last week Trump delayed removal of the exemption to give the Commerce Department more time to prepare.

Mylen Yamamoto Tansingco, the CEO of the influencer talent management firm Clique-Now, said her client's brand campaigns had not been directly affected by the tariffs. But she said she was "anticipating a snowball effect" where increased pricing leads to less consumer spending, which then lowers marketing budgets.

The trade wars may creep into other parts of the creator economy

Influencer marketers aren't the only ones in the industry bracing for impact.

The creator agency The Network Effect works with a Chinese manufacturer for its Beyond Lost streetwear brand, founded by the influencer Alyssa McKay. The agency's cofounder Brian Nelson said the political back-and-forth posed daily worries.

"Currently we have a pretty big shipment for us on a boat on the way over" via UPS, Nelson said. "If any of this kicks into gear with China, we don't even know who pays what when it gets here."

The Network Effect is seeking to diversify its manufacturing partners and plans to eat any immediate tariff-related costs. But Nelson said the business "wouldn't be fine in a long-term scenario" without changes.

Canada is also an open question for the agency — though tariffs are paused — as it is Beyond Lost's second-biggest consumer market after the US. (Goods ship from its Chinese manufacturer to the US and then to Canada upon sale.)

"You have to look at the headlines every day to kind of see where the hockey puck's moving," Brian Mandler, the agency's other cofounder, said.

If you know more about the recent impact of US tariffs on influencer marketing contact the author at [email protected] or through the encrypted messaging app Signal (+1 646-768-4720).