Cheap Imports Are Surging in the US and Americans, Temu and Shein Are Lovin’ It
Who doesn’t like a good deal? And we’re not talking about Dollar General good. We’re talking Temu good. If you’ve found yourself addicted to scrolling for $20 smart watches or “Switch” controllers, you’re not alone. The US has seen a surge in cheap goods in recent years, and here’s how it started…
Rise of cheap imports: In 2016, the US raised the minimum amount for expedited, duty-free treatment from $200 to $800 (a.k.a. the de minimis rule) — in an attempt to generate more tariff revenue from big-ticket items.
Such imports into the US grew nearly 4x over the next five years and a recent report estimated that two popular discount Chinese apps — Shein and Temu — were responsible for 30% of these goods coming into the US.
Fast-retailer of the year(-to-date)…
… goes to Temu — which has been the US’ top iOS app for most days in 2023. Last year, Shein and Temu were the second and fourth most downloaded shopping apps in the US — behind Amazon and Walmart, respectively. And by May of this year, spending on Temu had already surpassed Shein’s by 20%. Many Americans got their first exposure to Temu during its Super Bowl ad this year — and its growth has been astounding (not ChatGPT level, but still fast).
- Since launching last September, Temu reached 50M users in just six months and hit 100M three months later.
- It took Shein and Wish (NASDAQ:WISH) nearly three years to reach 50M users.
That helped Temu’s parent company, PDD (NASDAQ:PDD), rise over 48% in the past year — while the S&P 500 is up 12% in the same period. And Shein is also reportedly looking to join Temu in the US markets with a planned IPO. But this week, lawmakers from 16 states asked the SEC to audit Shein over its alleged use of forced labor, which Shein has previously denied.
Forward-looking: The use of forced labor has been a contentious issue, and with US-China trade tensions heating up, cheap US imports could become a bigger focus. Former US trade rep Robert Lighthizer has pushed Congress to remove the de minimis rule or lower the threshold — saying companies are taking advantage of the “loophole” and is impacting domestic retail and manufacturing jobs (BH).