The expiration of a key U.S. trade exemption on May 2 is forcing Chinese e-commerce platforms Temu and Shein to cut back on advertising. This exemption allowed low-cost goods under $800 to be shipped duty-free into the U.S., fueling their rapid growth. Morgan Stanley analysts have lowered ad revenue estimates across digital platforms due to expected ripple effects from decreased e-commerce spending, which could impact major players like Meta and Google. Consequently, Temu's advertising spend has sharply declined, reflecting broader market pressures affecting digital advertising.
Temu's daily average U.S. ad spend on Facebook, Instagram, TikTok, Snap, X and YouTube declined a collective average of 31% between March 31 and April 13.
E-commerce drives online advertising and online advertising drives e-commerce, so when large numbers of first-party/third-party sellers and SMBs could be adversely impacted by China tariffs... there are ripple effects in the digital ad markets.
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