Meta, Google, Snap Set To Lose Billions In Ad Revenue From Chinese Sellers As Trump Closes De Minimis Exemptions: Report – Alphabet (NASDAQ:GOOG), BigCommerce Holdings (NASDAQ:BIGC)
Chinese online retailers Temu and Shein are grappling with the repercussions of a terminated tariff-free shipping loophole. The closure of this loophole has not only affected these retailers but has also impacted the digital advertising strategies of tech giants such as Meta Platforms Inc. META and Alphabet Inc. GOOGL GOOG.
What Happened: With the closure of this loophole, Temu and Shein are now subjected to tariffs of up to 145% on Chinese goods.
These tariffs are expected to heavily impact companies that rely on selling goods at low prices and attracting customers through intensive online advertising. Consequently, Temu and Shein have reportedly already begun reducing their advertising spend, according to a report by The New York Times.
According to estimates from market intelligence firm Sensor Tower, between March 31 and mid-April, Temu reduced its average daily U.S. advertising spend on Facebook, Instagram, TikTok, Snap SNAP, X, and YouTube by 31% compared to its average daily spend over the prior 30 days.
Marketing firm Tinuiti revealed that in April, Temu and Shein, previously dominant advertisers on Google in the U.S., began disappearing from the platform. Temu, which made up 19% of all U.S. Google Shopping ads on April 5, saw its share drop to zero just a week later.
In April, Chinese advertisers brought in $8.4 billion in revenue for Meta, making up roughly 11% of its total and more than twice the amount generated in 2022. Susan Li, Meta’s chief financial officer, said some Asian retailers scaled back their U.S. advertising budgets in anticipation of the potential end of the so-called de minimis exemption.
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Why It Matters: The tariff-free shipping loophole, which permitted goods made in China and Hong Kong valued at less than $800 to enter the United States without import taxes, has been terminated by President Donald Trump. This move has significantly impacted Temu and Shein, who have been leveraging this for their business operations.
The termination of the de minimis exemption has also exposed e-commerce software vendors and platforms to new challenges. Companies like Shopify Inc. SHOP, BigCommerce Holdings Inc. BIGC, and Lightspeed Commerce Inc. LSPD are among those most affected.
Furthermore, a report revealed that Temu and Shein had plans to increase prices from April 25, thereby shifting the burden of the tariffs onto consumers. This move was an attempt to counteract the impact of the tariffs and the crackdown on affordable imports.
Temu also announced it has stopped shipping products from China to U.S. customers and will now fulfill U.S. orders from local warehouses as it shifts to a domestic fulfillment model.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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