While the trade policies undergo rapid changes and tariffs continue to rise, e-commerce fashion retailers like Shein and Temu have been rethinking their strategies.
Recently, President Donald Trump raised tariffs to as much as 145% on Chinese imports. Online fashion retailers are dealing with rising costs, shifts in supply chains, and lowering consumer confidence.
In March 2025, 67% of American shoppers cited inflation as the most pressing issue in 2025, according to a survey reported by Shein and The Harris Poll. This in turn has led to an uptick in thrifting in the online fashion retail market, with the industry set to soar to $74 billion by 2029.
This mounts pressure on online fashion retailers, and the de minimis exemption, which allowed small parcels to enter the US tax-free, was terminated on May 2. Online fashion businesses are navigating this changing landscape and adjusting to the changing policies. Retail Gazette USA takes a look at how online fashion retailers are shifting their strategies amid increasing tariffs.
Raising prices
In response to the increased tariffs on imported goods, fast fashion giants Shein and Temu issued a statement on their websites notifying customers of price increases.
Due to the increased taxes, the price of goods on the e-commerce platforms has significantly increased. The Chinese fashion giants relied on a business model that took advantage of the de minimis loophole and offered low-cost apparel; however, this ended when tariffs rose and duty-free small parcels were ended.
The statement posted on the website read: “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.
“We’re doing everything we can to keep prices low and minimize the impact on you. Our team is working hard to improve your shopping experience and stay true to our mission: making fashion accessible for everyone.”
American shoppers have been bracing for price increases due to the additional tariffs that have rolled out recently.
Shifting supply chain
The new tariff regime has also prompted a shift in supply chain strategy. Footwear brand Steve Madden has accelerated its move away from Chinese manufacturing, reporting minimal disruption in its Q1 2025 results due to groundwork laid in alternative markets.
The footwear giant managed to successfully mitigate the financial headwinds from tariffs and reported a strong performance in the first quarter of 2025.
Edward Rosenfeld, CEO of Steve Madden, said: “Simultaneously, we sharply accelerated our shift of production out of China, capitalizing on the groundwork we’ve laid in alternative countries of production over the last several years to move quickly and minimize disruption as we did them.
“Due to the foundation we have built in these other countries, combined with our model of working close to the season, we have been able to significantly reduce the amount of fall 2025 production out of China.”
Additionally, the Chinese fast fashion giant Temu plans to fulfill orders from a local fulfillment center to dodge tariffs, according to a report by Fashion Dive.
A Temu spokesperson said:
“The move is designed to help local merchants reach more customers and grow their businesses. “This shift is part of Temu’s ongoing adjustments to improve service levels.”
The e-commerce retailer aims to reduce the costs and provide a business platform for local merchants, according to the company. Its rival, Shein, has not adopted the same strategy yet moving forward.
Highlighting US-produced goods
Some retailers are taking a different approach: capitalising on consumer interest in domestically made products. Amazon has reported a surge in searches for “made in USA products only,” with search volumes rising 220% year-over-year.
Vintage and handcrafted retail platform Etsy started to highlight US-based merchants in curated sections of its website as a response to the newly added tariffs on Chinese goods.
American Giant, a brand that manufactures and produces its goods in the US, has been leveraging the US-made label as a marketing point amid the ongoing trade war. However, the CEO of American Giant, Bayard Winthrop, warned of difficulties for other fashion retailers with a supply chain reliant on foreign imports.
Winthrop said to NPR in April: “Most apparel brands, big and small, are really dependent on a globalized supply chain, and in many cases, very dependent on places like China and Vietnam.
“And I think for those people, it’s a scary time, because particularly in regard to China, if the tariffs roll in and hold… I think that’s going to fundamentally change the posture.”
According to recent reports, Chinese fast fashion giant Temu is also promoting locally made merchants on its website to fend off tariffs.
A Temu spokesperson said: “All sales in the US are now handled by locally based sellers, with orders fulfilled from within the country. Temu has been actively recruiting US sellers to join the platform.”
Moving forward, the online fashion retailer plans to pause its price increases as they shift to US-based fulfillment and merchants.
Selling underperforming brands
Beyond sourcing and pricing strategies, fashion retailers are offloading underperforming brands to improve their focus on core, profitable brands amid steep taxes and rising competition. The strategic divestitures help e-commerce businesses offload any unsuccessful brands within the company.
Tapestry sold its footwear brand Stuart Weitzman for $105 million in an effort to focus on its stronger brands, including Kate Spade and Coach, which brought in strong sales in its most recent financial quarter.
Additionally, Etsy sold off its secondhand musical marketplace, Reverb, to focus on secondhand apparel marketplace Depop and Etsy. The streamlining of operations allows brands to invest more into their successful ventures.
Moving forward, other retailers may continue to trim down their fleet to focus on other well-performing brands.
As the pressure from tariffs continues, online retailers are rethinking their strategies to adapt to the changing macroeconomic backdrop. By narrowing their losses, production costs, and shifting their supply chains, they’ve created sustainable solutions for remaining afloat in a difficult market. Moving forward, the e-commerce business will have to learn to quickly adapt to changing policies.
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