Shein warns of Trump tariff impact after posting first-quarter loss

By the Editorial Team · Thursday, July 30, 2026

Shein reported a $99 million loss in Q1 2026, a sharp reversal from last year’s profit, primarily due to increased U.S. tariffs on imports from China following the end of the de minimis exemption. The company’s declining revenue in the U.S. and emerging regulatory fees in Europe highlight significant challenges ahead as Shein prepares for its upcoming public listing.

Shein, the fast-fashion retailer preparing for a public listing, reported a first-quarter loss of $99 million for 2026, marking a sharp reversal from a $395 million profit in the same period last year, according to pre-IPO filings submitted to the Stock Exchange of Hong Kong. The company attributed the downturn largely to changes in U.S. trade policy affecting imports from China.

Founded in Nanjing, China, and headquartered in Singapore, Shein has been significantly impacted by tariff adjustments enacted under the Trump administration. In May 2025, the U.S. ended the de minimis exemption, a trade provision that previously allowed certain low-cost goods from China to enter the country with reduced or no tariffs. The company reported that this policy shift has had an "adverse impact" on sales in its largest market.

Revenue from the United States declined 14.3% to $2.04 billion in the first quarter of 2026, down from $2.38 billion during the same quarter in 2025. The share of U.S. revenue relative to the company's global earnings also declined, representing 22.5% of quarterly revenue compared to 29.4% of annual revenue in 2023. Shein disclosed that products shipped directly from China or through its marketplace to U.S. customers now face tax rates ranging between 10% and 87.5%, up from a previous range of 0% to 62.5%.

In response, Shein is pursuing several strategies, including raising prices in the U.S. market to absorb some of the increased costs. The company anticipates passing most of the tariff-related expenses onto consumers through its cost-plus pricing model.

The filing also mentioned external factors beyond tariffs, including geopolitical tensions. Shein noted that the ongoing conflict involving the U.S. and Iran has affected consumer demand in the Middle East and disrupted shipping routes through the Strait of Hormuz. However, the company said it does not currently expect this situation to have a material adverse effect on its overall business.

In addition to challenges in the U.S., Shein faces regulatory hurdles in Europe, where the European Union recently introduced a €3 fee on low-value e-commerce imports, aiming to address concerns about unfair competition from Chinese imports. Europe accounted for roughly one-third of Shein’s revenues in 2025. The company acknowledged that it is too early to fully assess the impact of this new fee but suggested it could be comparable to or greater than the effect seen in the U.S. after the removal of the de minimis exemption.

Shein is also confronting criticism related to broader operational practices. The company has been scrutinized over working conditions in its supplier factories, the potentially addictive design of its shopping app, and the environmental impact of shipping significant volumes of products by air.

As Shein moves closer to its anticipated initial public offering, these financial pressures and regulatory challenges underscore the complex environment it faces while seeking to secure new investment and sustain growth.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.