• Temu faces challenges from U.S. tariffs, leading to a 62% drop in app downloads and a sharp decline in its App Store rankings, now at No. 69.
• The company has slashed U.S. ad spending by 77%, impacting its visibility, while competitors like DHgate and Taobao capitalize on the gap.
• Rising tariffs and price hikes are affecting not just Temu but also rivals like Shein and sellers on platforms like Amazon and TikTok Shop.

Chinese online retailer Temu, famous for its “Shop like a billionaire” campaign that made waves during last year’s Super Bowl, has drastically reduced its U.S. advertising budget. This pullback comes as the company faces challenges from President Donald Trump’s tariffs on trade partners, leading to a sharp decline in its App Store rankings and threatening its once-dominant presence.

Downloads for the Temu app have fallen by a staggering 62% in recent days, according to SimilarWeb, signaling a significant hit to its U.S. market traction. Once a regular in the top 10 free apps on Apple’s App Store, Temu now ranks at No. 69. Meanwhile, rivals like DHgate and Alibaba’s Taobao have surged, capitalizing on the vacuum Temu’s reduced visibility has created.

Tariffs Shake Up Temu’s Business Model

The sweeping tariffs introduced by President Trump have upended Temu’s business strategy. Packages shipped from China now face a hefty 145% tariff, with the de minimis rule—which previously allowed shipments valued under $800 to enter the U.S. duty-free—set to expire on May 2.

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Reacting to the increased costs, both Temu and its rival Shein have announced price hikes. A notice on Temu’s website reads, “Due to recent changes in global trade rules and tariffs, our operating expenses have gone up. To keep offering the products you love without compromising on quality, we will be making price adjustments starting April 25, 2025.”

This development isn’t just impacting Temu. Sellers on Amazon’s third-party marketplace and businesses using TikTok Shop, many of whom rely on Chinese manufacturers, are also grappling with higher costs and considering price increases.

Ad Spending Hits Rock Bottom

Temu’s advertising blitz, once critical to its growth, has slowed to a trickle. The company slashed its paid traffic efforts—spanning search, display, and social media ads—by 77% since April 11, SimilarWeb reports. Marketing firm Tinuiti also found that Temu’s share of Google Shopping ad impressions dropped from 20% on April 5 to zero within a week.

For a brand that relied heavily on ads featuring irresistibly cheap deals like 50-cent eyebrow trimmers and $5 T-shirts, this pullback is monumental. Meta, which benefited significantly from Temu’s aggressive ad spending, may also feel the pinch. Advertising analyst Brian Wieser estimates that Chinese advertisers contributed over $7 billion to Meta’s $132 billion in ad revenue in 2023.

Rivals Step Up as Temu Stumbles

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While Temu’s app ranking has slid, competitors are rising. DHgate recently climbed to No. 2 on the free iPhone app list in the U.S., while Taobao now holds the No. 7 position. Viral videos promoting ultra-cheap products have spurred their popularity, filling the gap Temu left behind.

Meanwhile, Amazon is making moves to capture price-sensitive shoppers. The e-commerce giant launched “Amazon Haul” last November, offering products under $20, many sourced from China to directly compete with Temu.

Temu’s Future in the U.S. Market

E-commerce analyst Juozas Kaziukenas predicts that Temu will likely resume U.S. ad spending eventually but is focusing its dollars on other global markets for now. “It doesn’t mean Temu usage has dropped as significantly as the app did,” Kaziukenas said, adding that the decline reflects a halt in new user acquisition rather than a collapse in existing customer activity.

However, Temu’s challenges are far from over. The tariffs not only impact pricing but also complicate its ability to compete in a market where every dollar counts for cost-conscious shoppers.

What This Means for Shoppers

The rise of tariffs and shifting advertising strategies could lead to fewer deals and higher prices, impacting bargain hunters who once flocked to Temu. For now, customers may need to explore alternatives as the battle for budget-friendly e-commerce heats up.

Join the Conversation

What are your thoughts on Temu’s recent struggles? Have you noticed fewer ads or felt the impact of rising prices? Share your opinions in the comments below, and don’t forget to share this article with others who might be affected.

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