The recent end of the de minimis exemption is hurting U.S. user traffic for Chinese e-commerce platforms SHEIN and Temu (PDD). According to data shared from Sensor Tower to CNBC, Temu’s daily active users in the U.S. dropped by 52%, while SHEIN’s fell by 25%. Monthly average users also declined by 30% and 12%, respectively, between March and May. These drops happened at the same time that both companies reduced their U.S. advertising in response to new trade rules and shrinking engagement.

The de minimis rule had allowed items under $800 to enter the U.S. tariff-free, which helped platforms like Temu and SHEIN avoid taxes by shipping directly from China instead of using U.S. warehouses. In April, the Trump administration closed this loophole and applied a 120% tax to qualifying items that mostly targeted Chinese imports. In May, a new order lowered the tariff to 54%. As ad spending fell by 40% for Temu and by 65% for SHEIN on a year-over-year basis, their App Store rankings also dropped sharply: Temu slid from the top 3 to 132, while SHEIN fell from the top 10 to 60.

PDD, which owns Temu, admitted in its latest earnings call that U.S. trade policy is hurting its business. The company warned that growth could continue to slow and stated that it would continue to invest in order to support sellers and buyers during these changes. In fact, to lower shipping costs, Temu is now adding U.S.-based sellers and setting up local warehouses. SHEIN is also growing its U.S. infrastructure, with warehouses located in Indiana, Texas, New Jersey, and California, as well as logistics offices in Seattle and Los Angeles.

Turning to Wall Street, analysts have a Moderate Buy consensus rating on PDD stock based on 11 Buys, eight Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average PDD price target of $124.45 per share implies 24.8% upside potential.

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