Shein faces sales declines due to new US and EU customs tariffs

Shein is facing significant challenges to its low-cost business model due to new customs regulations in the United States and Europe. Documents prepared for the company’s potential listing on the Hong Kong Stock Exchange indicate that new tariffs have already impacted both sales and profitability.

In the United States, the removal of the ‘de minimis’ exception—which previously allowed packages valued under $800 to enter duty-free—has forced the retailer to increase prices to cover costs. Consequently, Shein’s U.S. revenue fell by over 3% in 2025 and saw a sharper decline of 14% in the first quarter of 2026 compared to the previous year. Applicable tax rates on goods from China have risen from a range of 0%-62.5% to between 10% and 87.5%.

The company faces similar pressures in Europe, which accounted for approximately 35% of its revenue in 2025. Following the European Union’s decision in July to eliminate customs exemptions for packages valued under 150 euros and introduce a fixed fee per product category, Shein is considering price increases to offset costs. Growth in the European market has already slowed significantly, dropping from 33% between 2023 and 2024 to just 2% in the first quarter of 2026.