Shein reported a quarterly loss of $99 million for the first three months of the year, a significant shift from a net income of $395 million in the same period a year prior. The company attributed the downturn partly to the removal of an import duty exemption on small packages by former U.S. President Donald Trump, which has affected sales.

The elimination of the U.S. "de minimis" exemption, which allowed goods valued at $800 or less to enter the country tariff-free, has had an adverse impact on Shein's U.S. sales and overall revenue growth, according to a company filing. This exemption had been a key factor for U.S. consumers purchasing low-cost items from online platforms like Shein and its competitor Temu. The White House stated the exemption was being circumvented to evade tariffs and facilitate the import of illicit substances.

This development comes as Shein prepares for its stock market debut in Hong Kong. The China Securities Regulatory Commission (CSRC) granted approval for the share sale on July 10, following earlier unsuccessful attempts to list in New York and London. The Hong Kong IPO is anticipated in the coming months, though details regarding its size, timetable, and pricing have not yet been disclosed.

In response to the increased duties and taxes in the U.S., Shein indicated it is exploring various strategies, including potential price increases in the American market to partially offset the added costs. The company also noted that the conflict in Iran has negatively impacted demand, increased expenses, and caused delivery delays in certain regions.

First-quarter figures were also influenced by a $328 million paper loss resulting from an accounting change related to special investor shares, which are convertible into ordinary stock prior to a listing and whose value can fluctuate. Despite the quarterly loss, Shein reported a notable increase in customer engagement. For the year ending March 31, 2026, the company served 281 million active customers, a rise of over 16% from the previous year, with more than one billion orders placed.

Meanwhile, the European Union has also implemented measures to address competition concerns, imposing a €3 levy on low-value e-commerce imports starting in July. This action is intended to curb what the EU describes as unfair competition from China.