Attention Taiwan cross-border sellers and e-commerce entrepreneurs! With the impending suspension of the minimum tax exemption on May 2, Temu and Shein are rapidly losing their dominance in the US App Store. Temu plummeted from #3 to #85 in just two weeks, and Shein from #7 to #80 - a clear indication that the revolution of shopping directly from China is is facing its first real market correction.
Demand hasn't disappeared - as evidenced by other Chinese apps surging in the opposite direction. This decline actually represents a strategic ceding of U.S. market share by Temu and Shein, as they are reducing ad spending that would otherwise support rankings and downloads.
What I'm about to say may turn your perception upside down. This collapse in the rankings highlights the fact that Temu's and Shein's meteoric rise was heavily reliant on aggressive ad spending, a level of spending that has become unsustainable in the new market conditions. According to Reuters, Temu's average daily U.S. ad spend at the beginning of April was down 311 TP3T from March, while Shein's was down 191 TP3T. Of Temu's nearly 30,000 ads in Meta's ad inventory, only a handful are still active in the U.S.
This is an inevitable market correction for a business model built on regulatory arbitrage. When the duty-free minimum was expanded from $200 to $800 in 2016, it set the stage for Temu, Shein, and later Amazon Haul. U.S. Customs data show that minimum duty-free imports exploded from $9.2 billion in 2016 to $54.5 billion in 2023, with Chinese sellers accounting for nearly 60% of all shipments.
What's most striking is that by announcing price increases at almost the same time, starting April 25, both companies are effectively admitting that their ultra-low price model won't survive the upcoming tariff realities. By losing their lowest duty-free advantage, they will face the same tariffs that U.S. retailers have suffered for years.
Shein has reportedly just received approval from the UK's Financial Conduct Authority for an IPO in London, which initially targeted a valuation of $66 billion, but amid increased uncertainty is now reportedly valued at closer to $50 billion. What does this mean for Taiwanese manufacturers and cross-border exporters?
Specific platforms may rise and fall, but U.S. consumer demand for low-cost Chinese goods remains strong. The de minimis exemption has created an unfair advantage, allowing Chinese platforms to consistently undercut U.S. retailers. Now, for the first time since the Trump administration took office, the impact of bold policy changes is having a material effect on market share.
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# Cross-border E-commerce # Amazon Global Store # Taiwan Sellers # Market Adjustment # Customs Policy # E-commerce Entrepreneurs # Cross-border Brands # U.S. Markets
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