Temu Halts U.S. Ads as Tariffs Crush Business Model, App Store Rank Nosedives

In a dramatic turn for cross-border e-commerce, Chinese shopping platform Temu has slashed its advertising spending in the United States, a move closely tied to escalating U.S.–China trade tensions and the abrupt closure of a century-old tariff loophole.

From App Store Darling to Digital Disappearance

Temu, known for flooding U.S. social feeds and search results with ultra-low-cost product ads, has seen its App Store ranking crash from the top 5 to 58th place in just three days. The drop began immediately after the company ceased all Google Shopping ad campaigns on April 9, according to data from performance marketing firm Tinuiti.

By April 12, Temu’s share of U.S. Google Shopping impressions had dropped to zero, down from a market-leading 19% just weeks earlier.

The cuts extended to Meta’s platforms, where Temu had once spent an estimated $2 billion on U.S. ads in 2023. As of mid-April, that spending had collapsed to “negligible levels,” marking one of the most dramatic advertising withdrawals in the U.S. e-commerce sector in recent years.

Trump’s Tariff Barrage Targets Temu’s Core

Temu’s retreat is directly tied to President Trump’s aggressive new tariffs on Chinese imports, which surged to 145% by April 9, up from just 10% in February. The increases were phased in over three months:

• Feb: 10% initial tariff
• Mar: Additional 10%
• Apr 2: 34% “reciprocal” tariff
• Apr 9: Further 125% layer (on top of existing 20%)

This effectively quadrupled the cost of Chinese goods entering the U.S., creating an unsustainable environment for platforms like Temu and its fast-fashion counterpart, Shein, which rely on thin margins and ultra-low pricing.

China retaliated with matching tariffs, raising duties on U.S. exports to 125%, prompting warnings of an estimated 1.0% hit to U.S. GDP and an average $1,300 tax burden per American household in 2025.

De Minimis Loophole Closure Ends Duty-Free Direct Shipping

Perhaps more disruptive than the tariffs was the April 2 executive order eliminating the “de minimis” exemption for Chinese and Hong Kong packages valued under $800. Effective May 2:

• Non-postal shipments under $800 from China will no longer be duty-free.
• Postal shipments will incur a 30% duty or $25/item, rising to $50/item after June 1.

This rule had previously allowed 1.36 billion low-value Chinese packages into the U.S. tariff-free in 2024 alone. With its closure, Temu’s direct-to-consumer model is fundamentally disrupted. The platform must now either absorb tariffs, raise prices, or rapidly shift sourcing to other countries, a move that could raise prices by up to 50% for air-shipped goods.

Short-Term Winners and Long-Term Uncertainty

The sudden disappearance of Temu from U.S. ad channels has created temporary breathing room for rival brands and AdTech firms, as a significant portion of Google and Meta ad inventory becomes available. However, it also underscores the fragility of international e-commerce strategies that rely on favorable trade rules and relentless paid acquisition.

Temu’s dramatic pullback signals a broader reckoning for Chinese e-commerce companies in the U.S. market, especially as geopolitics and trade policy override ad budgets and user growth. With a once top-ranked app now tumbling into obscurity, the message is clear: the tariff era is no longer an abstract policy shift, it’s rewriting the rules of global commerce.