Temu, the global discount e-commerce platform owned by China’s PDD Holdings, saw its daily U.S. users drop by 58% in May, according to Sensor Tower.

This sharp decline reflects growing challenges for the platform as tensions rise in the U.S.-China trade relationship.

Temu cut its U.S. advertising budget and revised its order fulfillment strategy after the White House ended the “de minimis” rule on May 2.

The policy had allowed Chinese companies to ship low-value goods to the U.S. without paying tariffs.

Temu, along with fast-fashion leader Shein, used the “de minimis” rule for years to ship products directly from Chinese suppliers to U.S. customers, enabling lower prices.

Since President Donald Trump imposed broad trade tariffs, both companies have experienced significant drops in sales and customer growth, according to data from Bain & Company.

Temu’s decline, however, has been more pronounced than Shein’s.

Tariffs forced both platforms to raise prices, but data shows Shein has managed to increase spending per customer compared to a year ago, while Temu has struggled.

Temu did not respond to requests for comment regarding the decline in U.S. daily users or its challenges in the U.S. market.

Morgan Stanley equity analyst Simeon Gutman noted in a May report that engagement on Temu has fallen sharply since the tariff exemption ended.

“While the tariff environment is uncertain, if the status quo remains for an extended period, we believe Temu’s competitive threat will continue to weaken,” Gutman said.

PDD Holdings, the parent company of Temu, reported a 47% year-over-year decline in net profit for Q1 2025, totaling $2.03 billion, and a 10% increase in revenue to $13.18 billion—the slowest growth rate since early 2022. The company’s stock dropped nearly 14% following the announcement.