Why Americans Will Pay More for Temu and Shein

The new era of U.S. consumerism began on May 2. After enjoying years of tariff-free exports from the de minimis rule, its end will change PDD’s business practice. Four weeks ago, China already told Shein to halt its supply chain diversification efforts. The Ministry of Commerce did not want firms to relocate their supply chain to Vietnam and other Southeast Asian countries.While China’s firms will face weaker sales and higher costs, Americans will no longer have as much access to cheap Temu and Shein goods. This shift would help U.S. apparel firms like Gap (GAP), TJX Companies (TJX), and Abercrombie & Fitch (ANF). Profit margins for those firms will expand as consumers reluctantly pay more for clothing.PDD’s (PDD) Temu shift its business model to adjust to the new trade rules. Still, Temu will not likely mast its past growth. The firm thrived by exporting goods for incredibly low prices. For example, it sold sneakers for only $5.00. Under de minimis, consumers could buy goods duty-free since 2016.China Retail Stocks SoaredInvestors are not concerned about the end of the duty-free period. Alibaba (BABA) is up by 75% from its 52-week low. PDD added 6.64% in the last week, while JD.com (JD) shares are steady.