• Temu and Shein raise prices April 25 due to US tariffs.
• Factory owners in China’s “Shein villages” see orders decline.

Temu and Shein, the two China-based ecommerce platforms known for low prices on everything from clothing to electronics, are preparing to increase prices starting April 25. The change comes in response to recent shifts in US trade policy that target low-cost imports.

In nearly identical letters to customers this week, both companies pointed to rising operating costs caused by updated tariff rules. “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,” the messages read, urging users to shop “now at today’s rates.”

The timing of the price hike coincides with a new executive order signed by US President Donald Trump. Set to take effect May 2, the order eliminates the so-called “de minimis” loophole that allowed packages worth under $800 to enter the US duty-free.

The change is expected to have a direct impact on high-volume exporters like Temu and Shein, whose business models have long relied on this exemption to keep prices competitive. Neither company has responded to requests for further comment.

Trade shifts ripple through supply chains

The effects of the policy changes are being felt not just by consumers, but by workers and factory owners in China who supply the fast-moving ecommerce chains.

In the Panyu District of Guangzhou, known informally as home to several “Shein villages,” factory owners and suppliers are facing falling order volumes as the company shifts parts of its production elsewhere. According to ABC News Australia, multiple factory owners and downstream suppliers have reported a noticeable decline in Shein’s local orders this year.

Several pointed to Vietnam as becoming the company’s next manufacturing hub. Among them is Mr. Li, a factory owner who has worked with Shein for the past five years. He said orders from the company have dropped by half in 2024.

“The impact is quite obvious,” he said. “Tariffs are not something that we can see an end to for the time being, and we don’t know what will happen next.”

Relocating production to Vietnam could help Shein sidestep some of the new tariffs – at least temporarily. Packages shipped from Vietnam may still qualify for the de minimis exemption. However, trade policy can shift quickly, and there’s no guarantee the US will continue to apply the exemption to imports from other countries.

A challenging trade-off

Shein’s current production model depends on short-run manufacturing of trendy items that can be shipped directly to consumers at low cost. Disrupting that model by shifting manufacturing outside of China comes with both logistical and financial risks.

Sheng Lu, a professor at the University of Delaware who studies the fashion industry, said the company may have to overhaul its entire supply chain to adapt. “The diversification of its sourcing base and a significant change in its business model will have to go hand-in-hand for Shein,” he said. And it can’t maintain that business model – shipping thousands of small-batch styles directly to the US – without the benefits of the current setup in South China.

Others in the industry echoed the view. Alison Layfield, director of product development at ePost Global, said relocating manufacturing to places like Vietnam could affect turnaround times and increase costs, especially in an industry where speed and price are important.

“The model is really genius when you think about it,” said. “But to move that whole business model, that’s going to definitely put a hiccup in their turnaround times and their costs. Of course they will want to pass those costs onto consumers but […] then consumers are not going to be ordering at the quantity and the price point that they have in the past”

Factories in limbo

For factory operators like Mr. Li, the idea of relocating to Vietnam is far from appealing. He said productivity in Vietnam is lower than in China and that the upfront costs of moving are too high. In his factory, a team can produce 1,000 garments in a single day – output he says would take a month in Vietnam.

While Mr. Li is now focusing more on supplying China’s domestic market, he acknowledged that others may not have that option. “They have only two choices,” he said. “One is to go bankrupt, and the other is to go to Vietnam.”

Temu and Shein’s efforts to maintain affordability will likely test the limits of the ultra-fast fashion model – and the global supply chains that support it.