It was fun while it lasted. Honestly, that's the vibe most American shoppers are feeling right now. For about two years, Temu was everywhere. You couldn't open an app without seeing a $3 pair of sneakers or a $0.50 vegetable slicer. But the party hit a brick wall.
Hard.
The numbers are pretty staggering. Temu loses majority of US users after tariffs became the headline nobody at PDD Holdings (Temu's parent company) wanted to see. We aren't just talking about a little dip in traffic. According to data from Sensor Tower, Temu saw its daily active users in the U.S. plummet by 58% in a single month following the trade policy shifts in early 2025.
Basically, the "shop like a billionaire" dream ran into a very expensive reality called the end of the de minimis loophole.
The day the cheap stuff died
So, what actually changed? For a long time, there was this thing called the de minimis exemption. It allowed packages worth less than $800 to enter the U.S. without any import taxes or duties. It was the secret sauce. Temu and Shein basically built their entire empires on this one rule. They’d ship millions of tiny, individual packages directly from China to your doorstep, and because each one was cheap, they paid $0 in tariffs.
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Then came May 2025.
The U.S. government effectively killed the loophole for Chinese e-commerce. Suddenly, those cheap shipments weren't exempt anymore. Instead of gliding through customs for free, items started getting hit with massive surcharges—sometimes as high as 145%.
Think about that. A $15 summer dress suddenly costs $40 after the government takes its cut. It’s hard to feel like a billionaire when you’re paying $25 in taxes for a piece of polyester.
Why the users vanished so fast
People are fickle. We like deals. When the deals stopped being deals, people stopped clicking. It's really that simple.
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When the tariffs hit, Temu had to make a choice: eat the costs and go bankrupt, or pass them on to you. They chose the latter. In April 2025, they sent out notices to users about "price adjustments." Within weeks, the average price of items in popular categories like toys and beauty jumped by over 40%.
The Ad Spend Collapse
But it wasn't just the prices. Temu also went dark.
- Ad spend dropped 94% in the weeks surrounding the policy change.
- They completely pulled back from Google Shopping.
- Meta (Facebook and Instagram) spend was slashed by nearly half.
If you aren't seeing the ads and the prices are double what they used to be, why would you go back? Most people didn't. Daily users dropped from a peak of around 70 million down to under 30 million. That is a massive exodus.
Is it a total collapse or just a pivot?
Here’s where it gets interesting. While the U.S. market is bleeding, Temu isn't exactly dying globally. They’ve basically looked at the U.S. map, sighed, and started circling Europe and Latin America instead.
In places like the Netherlands, France, and Italy, Temu actually increased their ad spend by up to 84%. They are reallocating the billions they used to spend on American Super Bowl ads to markets where the trade rules aren't as aggressive yet. In fact, roughly 90% of Temu’s 405 million monthly users are now outside the U.S.
They are also trying to "Americanize" their backend. They introduced a "half-custody" model where they beg sellers to stock goods in U.S. warehouses. This helps with shipping times (no more waiting 12 days for a spatula), but it also means the sellers have to deal with the tariffs themselves. It’s a messy transition.
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The Shein comparison
Interestingly, Shein hasn't been hit quite as hard. Don't get me wrong—they're hurting—but they managed to keep their "average spend per customer" up. Why? Probably because people are more loyal to a specific clothing style than they are to a random marketplace that sells everything from power drills to underwear.
Temu was built on the "dopamine hit" of a $1 bargain. When the bargain is $5, the dopamine just doesn't hit the same way.
What this means for your wallet
If you’re still trying to shop on Temu, you’ve probably noticed the "Import Fees" at checkout. It’s no longer the wild west. For most Americans, the platform has shifted from a "daily habit" to a "once in a while if I can't find it on Amazon" option.
The reality is that the era of the $2 smart watch is likely over. U.S. retailers like Amazon and Walmart are actually breathing a sigh of relief. They couldn't compete with the tax-free loophole. Now that the playing field is somewhat leveled, the "Temu effect" is fading.
What you should do next
If you're looking for those bottom-dollar prices, the game has changed. Here is how to navigate the new landscape:
- Check the "Ships from US" filter: If you still use Temu, only look at items already in domestic warehouses. You’ll avoid the surprise customs fees and get your stuff in 3 days instead of 3 weeks.
- Compare with Amazon: Surprisingly, for many small electronics and household goods, Amazon is now cheaper once you factor in Temu's new tariff surcharges.
- Watch for "Flat Fee" shipping: Some platforms are trying to bundle items into one large box to minimize the per-package customs processing fee. It saves them money, and sometimes they pass that on to you.
The "Temu loses majority of US users after tariffs" saga is a massive case study in how quickly a business model can break when the government changes one sentence in a trade law. It turns out, "shopping like a billionaire" was actually just shopping on the government's dime—and the bill finally came due.
Next Steps for You:
Check your recent order history on any international shopping apps. If you see new "service fees" or "regulatory surcharges," those are the tariffs in action. You might find better value switching back to domestic sellers who have already stabilized their supply chains for 2026.