When the online sellers Shein and Temu first came on the scene in America in the late 2010s and early 2020s, their U.S. competitors were terrified. Both retailers offered insanely low-priced gifts, apparel and home merchandise that came from Asia (mostly China) quickly and without import duties, giving them a huge leg up in the fight for consumer attention.

And for a while, those fears were well-founded. American consumers couldn’t get enough of these goods. Shein and Temu were each likely doing well over a billion dollars a year in sales in this country alone—and that’s saying something when most of what you are selling costs less than $10.

But today, the story has shifted. Both brands have severely reduced their presence in the American market—a result, it seems, of failing to adapt their business models to changing market conditions. Meanwhile, the next-gen consumers who were once their best customers have moved on to whatever new thing that has become the latest trend du jour.

The best proof of this pullback comes from the paperwork Shein filed in Hong Kong as it prepares to go public. (This comes after failed attempts to file in New York and London.) The company reported a loss of $99 million in its first quarter, versus a $395 million profit during the same period a year ago. It seems that much of that drop came from a 14 percent decline in revenues in the U.S. market compared to Q1 2025. The same filing also states that the company is being investigated by the U.S. Federal Trade Commission.

While Shein sales overall did grow 8 percent in 2025, it appears most of that growth came from outside the States. The big reason for the decline in America can be attributed to one single factor: the end of the de minimis regulations that had allowed most of the company’s product—and Temu’s, too—to enter the country without any duties or tariffs. The exemption, which covered products $800 or less, rewarded companies like Shein and Temu, who shipped low-cost items directly rather than importing to the States in bulk before distribution. With their approach, the $5 T-shirt, the $8 bowl and the $12 lamp represented incredible values against similar products coming from brands with a more traditional retail structure. And the American consumer, it’s been proven time and time again, loves a deal.

Once the de minimis exemption disappeared, the duties piled up—and they were often a substantial percentage of the overall price of the product. Suddenly, the deal was not so lovable.

A report last year in WWD proved just how motivated by price consumers can be as it detailed shifting shopper preferences. Citing data from a company called Consumer Edge, the report isolated the disenchantment with brands like Shein and Temu, tracking the way the brands’ shoppers turned instead to a broad section of more conventional retailers—including Bloomingdale’s, Kohl’s, Old Navy and Nordstrom Rack—in the wake of the de minimis exemption’s demise. The data also showed serious declines in both Shein’s and Temu’s revenues.

But the decline in business for Shein and Temu (the latter is a privately owned piece of a bigger company, so its numbers are not public) is not just due to tariffs. There’s also an intangible that’s much harder to measure: how much of what they sold was bought by consumers sucked into those low prices, only to subsequently discard the item when the novelty—not to mention the quality—faded. Landfills no doubt became the last resting spot for much of what was bought on the sites. Over time, shoppers have taken note.

In the meantime, both companies seem to have largely failed to adapt to the changing nature of the tariff environment here. Shein has expanded into new categories like beauty, and reportedly worked with vendors on supply chain and inventory systems, but the brand has chosen not to take measures like using more U.S.-based suppliers or arranging for more inventory to be held in North America as a way to get around the tariffs.

The most intriguing move Shein has made (and again, we know more about the company due to its public filing than the more opaque Temu) came this past May, when it bought Everlane, an apparel brand best known for its sustainable, eco-friendly stance—an ethos that is pretty much the antithesis of the fast-fashion giant’s positioning. Though we haven’t seen much of what it is doing with Everlane so far, the deal certainly raised a lot of eyebrows while creating curiosity about whether there will be more such acquisitions to come.

Both Shein’s and Temu’s sourcing models relied on hundreds (make that thousands) of small manufacturing points in China, which could produce thousands (make that hundreds of thousands) of products at ridiculously low prices—and do it over and over again—and quickly no less—if the item caught on. That model still exists, but the demand down the supply chain with the American consumer has certainly petered out compared to the days when Temu could spend tens of millions to run its ad several times during the 2023 Super Bowl, blowing up the internet with consumers trying to see what it was all about.

Shein and Temu have not left the American market, and while their sales here have certainly peaked, they continue to sell online. But Shein, at least, seems more interested in Europe these days—even opening a shop in Paris that created large lines and even larger controversy among the French. (According to a Le Monde report, that shop-in-shop in BHV Marais will soon shutter after an ownership change at the department store.)

If Shein and Temu were poised to become big-time disrupters to a certain portion of the American gift, home and fashion market, that danger seems to have passed—at least for now.

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Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.