Is Trump trade war destroying or redefining Shein in the US?

U.S. President Donald Trump said on Sunday — Washington will notify countries of higher tariff rates by the July 9 deadline, with new levies taking effect August 1. This timeline spells further trouble for fast-fashion giants like Shein, who are already reeling from tariffs that have eliminated their signature ultra-low pricing models. China has been the principal target of Trump’s tariff regime. On May 2, the U.S. ended the “de minimis” tax exemption for packages valued under $800, a loophole Shein exploited to ship ultra-low-cost goods from China directly to consumers tariff-free. As a result, the fast-fashion behemoth’s future in the U.S. has come into question, with China imports facing duties as high as 120% and 145%, effectively dismantling the model that made Shein a retail force in America. The immediate fallout? Shein hiked prices. A basic T-shirt that once cost $5 now ranges from $11 to $13. Blouses have doubled in price, with dresses increasing from $18 to as much as $42. It’s a similar story with accessories like bags. Will Shein’s price hikes lead to slower fashion? “Shein may absorb some costs temporarily, but not enough to offset such steep duties,” says Rodica Murphy, founder of RM Sustainability Consulting. “Higher import fees act like a brake on Shein’s output, a goal environmentalists have long pushed for. It has the potential to slow down overproduction, textile waste, and carbon emissions by making it harder to flood the market with $4 polyester T-shirts.” But while tariffs may support environmental aims in theory, Murphy cautions against viewing them as a corrective. “I don’t view tariffs as a silver bullet for a more ethical fashion industry,” she says. “They raise prices, but they don’t enforce better labor or environmental practices. In Shein’s case, management has signaled that it plans to absorb the hit or cut costs elsewhere. And we all know their workers are not paid fairly.” Indeed, the burden of rising costs may be shifted further down the supply chain. “Brands under cost pressure often squeeze their suppliers,” Murphy adds. “Factories may cut wages, increase hours, or relocate to countries with weaker labor laws, just to maintain margins. So, while it’s possible consumers might respond to higher prices by buying less, or turning to resale, Shein’s response will likely be to sidestep rather than solve its ethical issues.” This maneuvering is already underway across Asia. As U.S. tariffs hit Chinese exports, Chinese suppliers have ramped up operations in Vietnam, Indonesia, Malaysia, and Thailand. Many goods are being rerouted through Southeast Asia for minimal processing, a practice known as transshipment, before being exported to the U.S. under lower tariffs. In response, the Trump administration last week introduced a two-tiered trade deal with Vietnam, placing a 20% tariff on standard Vietnamese exports and a hefty 40% levy on goods deemed to be rerouted from China. While some manufacturing relocation is legitimate, enforcement is difficult. Goods often appear “Vietnamese” even if their core components or labor originate from China. Analysts estimate that up to 28% of Vietnamese exports to the U.S. are actually composed of Chinese content. That’s unsurprising as Chinese exporters and related businesses have demonstrated their ability to adjust to evolving trade regulations in the past. This gray zone blurs the lines between fair manufacturing diversification and circumvention. Even as Vietnam, Malaysia, and others step up origin certification procedures, much of the rerouting remains difficult to police, leaving Shein and similar companies with opportunities to continue bypassing direct Chinese tariffs without meaningfully improving supply chain ethics. Sales reflect the tariff shock. U.S. weekly revenue for Shein reportedly dropped 23% in the wake of the tariff announcement. Monthly active users declined 12%, while competitor Temu saw a 51% user drop. These platforms’ dominance in the American fast-fashion space is eroding, likely to Trump’s pleasure. In response, Shein has ramped up its international expansion, especially in Europe. It gained users in the U.K. and Germany, while Temu has made headway in France, Spain, and Germany. Yet, this pivot is fraught: the EU and U.K. are considering similar “de minimis” reforms, and regulators are scrutinizing both companies over product safety and compliance standards. Shein’s uncertain future, from IPO to pricing The pressure isn’t just external. Shein’s long-rumored London IPO has been stalled at a time of diminished investor confidence. But the company has reportedly now filed a draft prospectus confidentially for a Hong Kong IPO marking a rare deviation from the city's usual public filing process. It’s their third IPO attempt, following failed efforts in New York and London due to Chinese regulatory hurdles. The company’s valuation has reportedly gone from $100 billion to as low as $30 billion. Despite relocating to Singapore, Shein remains tethered to Chinese manufacturers and requires Beijing’s approval for the IPO to move forward. “There’s no question Shein will be forced to audit its make-versus-buy decisions,” says Murphy. “Even without caring about sustainability, the company will need leaner inventory planning now that unsold goods carry a hefty tax burden. In theory, this could moderate overproduction. In practice, it may simply reinforce Shein’s existing ‘make small batches and test’ approach.” To adapt, Shein has explored production shifts to countries like Vietnam and Mexico — a strategy Temu has also embraced. But, as Murphy says, “Without accompanying policies for transparency or labor rights, Shein’s new factories in Vietnam or elsewhere are just as opaque as the ones in China.” Ultimately, Shein’s long-term survival could hinge on redefining its business model, particularly in the U.S. market. “To thrive,” says Murphy, “Shein must evolve from a China-centric aggregator into a global multinational, blending local sourcing, compliance, and inventory intelligence. The tariffs might finally force that transformation, or expose the limits of its model.”

Tariff deadline looms: Goodbye Shein?

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Tariff deadline looms: Goodbye Shein?