Pittsburgh economist explains why Shein and Temu are raising prices due to Trump's tariffs on China
A leading economist in Pittsburgh explains what President Trump's tariffs on goods from China mean for your wallet.
In a tariff war between the two nations, China hiked its retaliatory tariffs earlier this month on U.S. goods to 125 percent, matching the level of tariffs that Trump has placed on Chinese imports. On Wednesday, Treasury Secretary Scott Bessent said the Trump administration has an "opportunity for a big deal" on trade between the U.S. and China.
So, what do shoppers need to know? The Trump administration's tariffs mean items shipped from China will soon cost consumers much more, experts say.
Shein and Temu to raise prices
Forget those $11 jean shorts or $1 glass cups. The Chinese e-commerce sites Shein and Temu will raise prices starting on April 25 because of tariff increases.
A sporty jacket at Shein sold for $6.76 just last month. It's already up to $8.23, and the hike hasn't even hit yet.
"The increase in tariffs means that the importer is going to have to pay an extra tax on that," said Gus Faucher, chief economist with PNC Financial Services Group. "And to some extent, they're going to pass that along to consumers. So, that means we're going to be paying higher prices for many of the goods that we buy."
Faucher says even if we don't buy foreign goods ourselves, American companies compete with these foreign companies, so they might raise prices, too. Right now, the tariffs against China sit above 100 percent.
"That basically means that the price is going to double to import it to the United States," said Faucher. "Temu and Shein were able to send packages directly to consumers without having to pay the tariffs. The rules have changed now, so even if it's a small, cheap item, they have to pay the tariffs. So, their prices are going to go up."
Both Shein and Temu issued customer notices. Shein said, in part, "We are doing everything we can to keep prices low and minimize the impact on you." Temu said, in part, "Due to recent changes in global trade rules and tariffs, our operating expenses have gone up."
Faucher expects big price increases because it's just the way these companies are set up.
"Obviously, they don't want to increase their prices too much because that's going to drive away consumers. On the other hand, they have very low profit margins. They profit by selling high volumes at low prices, so they don't have room to absorb higher tariffs in their profit margins."
That means consumers will likely turn to products sold from other countries where tariffs aren't quite as high.
Faucher's advice to consumers is this:
"Consumers can continue to be price conscious and comparison search online. They can talk with their elected officials and say, 'What are you doing to keep inflation low?' But I think it is going to be a difficult situation for consumers and for businesses over the next few months until we get more certainty, it becomes clear what the tariff outlook is."
Faucher added that it's possible the Trump administration rolls this back fairly quickly. But Faucher says in the near term, it will mean higher prices.
