U.S. President Donald Trump last week signed an executive order ending a loophole that allowed Chinese goods below the $800 minimum threshold to enter the U.S. duty-free.
Instead, each item will be subject to a tariff equal to 30% of its value, or $25, rising to $50 after June 1.
The change drew criticism that Shein and Temu would still be able to sell goods in the U.S. at lower prices than competitors that pay higher tariffs on wholesale imports of Chinese goods.
The sharp rise in prices is a hard blow to Shein and Pinduoduo Holdings' U.S.-based Temu, which analysts estimate is their biggest market, where they are able to undercut rivals with dirt-cheap goods, in part by avoiding import tariffs.
The two companies have been preparing for the end of the exemption period by expanding warehousing capacity in the United States. However, these preparations have been swallowed up by the escalating tariff war between China and the United States.
Tariffs on low-value packages are still lower than those on Chinese imports, which are currently as high as 104%. The tariffs took effect at midnight Washington time, pushing the world into an all-out trade war.
Analysts warn that removing the minimum exemption would not only upend the business models of these budget retail platforms and other Chinese e-commerce players, but also extend delivery times. Brittan Ladd, a U.S. supply chain consultant who has worked for Amazon and Dell, said ports will be overloaded with packages.
He added that the Commerce Department had launched a new software system to handle duty payments, but delays were still occurring due to the sheer volume of packages that needed to be processed.
Most of the goods sold on the Shein platform are produced in China. The fast-fashion giant has been trying to diversify its business outside countries such as Brazil and Türkiye, but has struggled to match the efficiency and responsiveness of Chinese factories.
The turmoil over Trump's trade moves has thrown Shein's plans for an initial public offering into uncertainty. The Singapore-based company had originally sought approval to list in London, but the listing application has been delayed several times due to regulatory uncertainty.
According to the Financial Times, Shein's profits fell by more than a third last year due to competition with rival Temu, which led to higher marketing and logistics costs.
Temu and Shein have not responded to requests for comment.