Temu, the Chinese online retailer that gained significant attention for its “Shop like a billionaire” marketing campaign during last year’s Super Bowl, has seen a sharp decline in its U.S. presence. The company, owned by PDD Holdings, has dramatically reduced its online ad spending and witnessed its ranking in the Apple App Store drop significantly, all thanks to President Trump’s tariffs on China and retaliatory tariffs from China.
The Rise and Fall of Temu’s U.S. Presence
Temu’s marketing blitz, which included hefty spending on TV ads and across Facebook, helped it become one of the most downloaded free apps in the U.S. for the past two years. However, recent data shows that the app’s downloads have plummeted by 62%, according to SimilarWeb. Ads promoting bargain products like eyebrow trimmers and cheap t-shirts that once flooded Google search results and social media feeds have largely disappeared.
The sudden shift in Temu’s fortunes can be attributed to the U.S. tariffs, which now impose a 145% rate on packages shipped from China, along with the expected removal of the de minimis provision for shipments worth under $800. This means that Temu and similar companies, including fast-fashion competitor Shein, will have to raise prices. Both companies have warned customers of price hikes starting in late April 2025.
Tariffs Hit Temu’s Ad Strategy
Temu’s reduced ad spending has had an immediate impact on its presence in the U.S. ad market. On April 5, Temu accounted for 20% of Google Shopping ad impressions, but by April 12, that figure had dropped to zero. Meanwhile, its competitors like Shein and Amazon continue to maintain significant ad impressions. Meta, which was once one of Temu’s largest advertising partners, has also seen the impact, as Temu has dramatically reduced its U.S. ad presence on Meta platforms, now running only six ads on the platform in the U.S., compared to tens of thousands globally.
The impact of the tariffs and the shifting ad strategy has pushed Temu’s app down to No. 69 in the top free apps in the U.S., down from consistently being in the top 10. Its rival Shein has also experienced a decline in rankings, dropping from No. 15 to No. 42.
With the drop in its ad spending and app downloads, Temu now faces increased competition from other Chinese retailers like DHgate and Taobao, which have risen in the app store rankings thanks to viral videos promoting their low-cost products. Despite these setbacks, analysts believe that Temu could eventually shift its focus to other markets, especially as its user acquisition efforts in the U.S. appear to have slowed down significantly.
What The Author Thinks
The tariffs imposed by President Trump are clearly making life more difficult for Chinese-based e-commerce platforms like Temu and Shein. While these platforms have been able to offer incredibly low prices thanks to Chinese manufacturing, the new tariffs are making it more difficult for them to compete in the U.S. market. As tariffs continue to affect these companies’ bottom lines, it’s likely that they will be forced to raise prices, which could diminish their appeal to American consumers who are accustomed to bargain prices. These changes could also have broader implications for international trade and online retail.
Featured image credit: Vitya_maly via GoodFon
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