Temu Reportedly Cuts Back on Paid Ads After Tariff Price Hikes
Last week, popular eCommerce retailers Shein and Temu announced plans for tariff-related price hikes.
So far, it’s not clear if these increases — scheduled to go into effect April 25 — have caused the companies’ traffic to spike, Ars Technica reported Friday (April 18).
However, the report said, data from Similarweb suggests that Temu has significantly scaled back on paid advertising, leading to an 80% downturn in paid search traffic. This could suggest that if Temu cuts back on ads, it could also push away shoppers, destabilizing its price models even further.
Both Shein and Temu sent almost identical letters to customers informing them of the price increases and encouraged them to shop “now at today’s rates.”
As covered here last week, the two companies had been able to keep prices down due to the “de minimis” exemption that allowed duty-free entry for goods priced below $800. However, the new U.S. tariff policy closes that loophole starting May 2.
“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 statements from both companies said.
In addition to the end of the de minimis exemption, Shein and Temu are also dealing with U.S. tariffs on Chinese imports, which has led the companies to seek workarounds such as moving their production lines out of China.
Meanwhile, online sales have been muted recently, according to new government data, as consumers up their spending on big ticket items like electronics and cars in anticipation of the new tariffs.
“But there were some indications that consumers and households bought new wheels and TVs at the expense of other categories,” PYMNTS wrote.
“Furniture and home furnishing stores reported $11.7 billion in sales, reflecting a 0.7% month-over-month decline, though sales were still up 7.7% compared to March 2024. Department stores — which are key channels for home furnishings — performed poorly for the second consecutive month, with sales declining 0.3% in March and 1.6% in February, resulting in a 2.5% decrease compared to March 2024.”
Also last week, quarterly earnings from Bank of America, PNC and Citigroup all reinforced the same conclusion: Robust consumer spending is propping up results, even as businesses and institutions wrestle with an uncertain macroeconomic landscape.
“Tariffs and the potential for a recession have not yet dramatically curbed consumer appetite, though some pullback in commercial lending and elevated caution on credit were evident,” PYMNTS wrote. “Digital adoption across retail banking and payments continues at a brisk pace, reflecting banks’ strategic push toward technology-driven growth.”
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