Jamie Spencer
Temu, the Chinese e-commerce giant owned by PDD Holdings, has been facing a serious setback in the U.S. market. Despite its “Shop like a billionaire” campaign catching the attention of Super Bowl viewers last year, the company’s fortunes have taken a sharp turn. A dramatic reduction in online advertising spending and changes in U.S. trade rules have triggered a noticeable dip in both app downloads and overall market visibility. As President Trump’s tariffs on Chinese imports continue to rise, Temu’s business model—once reliant on low-cost goods and massive advertising—faces major hurdles.
From Ad Blitz to Silence: The Impact of Rising Tariffs
Temu’s once-dominant advertising strategy, which heavily relied on online campaigns promoting affordable products like eyebrow trimmers and t-shirts, has been severely affected. After becoming the most downloaded free app in the U.S. for two consecutive years, Temu’s position in the Apple App Store has plummeted by 62%. As of now, the app has fallen to No. 69 in the rankings, a stark contrast from its previous top 10 status.
What triggered this sudden decline? The answer lies in President Trump’s sweeping tariffs on Chinese goods. With shipments from China now subject to a 145% tariff, Temu, like other Chinese retailers, is forced to reconsider its pricing strategy. In response to the higher operating expenses, Temu announced a price hike starting April 25, 2025, to offset the increasing costs brought on by the new tariffs. “Due to recent changes in global trade rules and tariffs, our operating expenses have gone up,” the company explained in a statement on its website.
The U.S. Tariffs and Their Ripple Effect on E-Commerce
The new tariff rules are not just affecting Temu alone; other Chinese e-commerce platforms like Shein are facing similar challenges. Both companies are raising their prices as a direct result of the increased tariffs. The effect on Temu’s paid advertising has been drastic as well. According to data from SimilarWeb, Temu’s paid traffic has dropped by a staggering 77% since mid-April, compared to a much more consistent advertising performance from competitors like Shein and Amazon. A significant reduction in Temu’s ad impressions on platforms like Google Shopping further exemplifies how the company is adjusting its marketing spend due to the economic squeeze.
The Competition Rises: DHgate and Alibaba Move Up
While Temu struggles, other Chinese retailers are capitalizing on the gap left by its reduced advertising presence. Companies like DHgate and Taobao have seen a sharp rise in their U.S. app rankings, with DHgate even landing at No. 2 among the most downloaded free iPhone apps in the U.S. These companies have been boosted by viral promotions and affordable prices, directly benefiting from the vacuum created by Temu’s decline.
On the other hand, Shein, another fast-fashion giant with ties to China, continues to hold a more solid position, currently ranked No. 42 on the app store despite facing similar tariff-related challenges. Temu’s advertising efforts have been significantly reduced, particularly on Meta platforms, where the company was once a major player. According to Meta’s ad library, Temu now runs just six ads on its U.S. platforms, compared to the 27,000 ads it runs across Europe and the U.K.
The Future of Temu in the U.S. Market
Despite the downturn, experts suggest that Temu may eventually return its focus to U.S. advertising. Juozas Kaziukenas, an e-commerce analyst, believes that while Temu’s new user acquisition efforts may be stalled, the company could reallocate its advertising dollars to other markets in the short term. The company’s struggle with rising tariffs and its pivot in marketing strategies may just be a temporary setback, but for now, the challenge lies in maintaining customer interest while dealing with the economic fallout from trade policy changes.
Conclusion: A Shifting E-Commerce Landscape
Temu’s experience is a striking example of how geopolitical events, like the ongoing trade war between the U.S. and China, can dramatically reshape the e-commerce landscape. With tariffs continuing to increase the costs of doing business and diminishing the effectiveness of its advertising strategy, Temu and other Chinese e-commerce platforms face a complex road ahead. As the market continues to adjust, it remains to be seen whether Temu can regain its former strength or if new competitors will capitalize on its temporary retreat.
