Shein and Temu Hit a Wall: User Traffic Tanks as Trade Wars Bite

Fast-fashion giant Shein and e-commerce upstart Temu (owned by PDD) are bleeding users—and geopolitics might be holding the knife.

Trade tensions between Washington and Beijing have slammed the brakes on their hypergrowth trajectories, with traffic numbers nosediving. No surprise—when elephants fight, the grass suffers.

Wall Street analysts, meanwhile, are busy downgrading projections while pretending they saw this coming. Funny how tariffs always seem to 'surprise' the same people who charge $500/hour for 'risk assessment.'

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The de minimis rule had allowed items under $800 to enter the U.S. tariff-free, which helped platforms like Temu and SHEIN avoid taxes by shipping directly from China instead of using U.S. warehouses. In April, the TRUMP administration closed this loophole and applied a 120% tax to qualifying items that mostly targeted Chinese imports. In May, a new order lowered the tariff to 54%. As ad spending fell by 40% for Temu and by 65% for SHEIN on a year-over-year basis, their App Store rankings also dropped sharply: Temu slid from the top 3 to 132, while SHEIN fell from the top 10 to 60.

PDD, which owns Temu, admitted in its latest earnings call that U.S. trade policy is hurting its business. The company warned that growth could continue to slow and stated that it WOULD continue to invest in order to support sellers and buyers during these changes. In fact, to lower shipping costs, Temu is now adding U.S.-based sellers and setting up local warehouses. SHEIN is also growing its U.S. infrastructure, with warehouses located in Indiana, Texas, New Jersey, and California, as well as logistics offices in Seattle and Los Angeles.

Is PDD a Good Stock to Buy?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on PDD stock based on 11 Buys, eight Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average PDD price target of $124.45 per share implies 24.8% upside potential.