Temu and Shein are pivoting to Europe in face of U.S. tariffs. But they may not get a warm welcome
U.S. consumer spending on Temu fell about 36% in May compared to a year earlier, while it fell 13% over the same period on Shein, according to trend data from Consumer Edge.
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Temu and Shein are pivoting to Europe as their business in the U.S. takes a major hit from unfavorable trade policies. But the China-founded budget e-commerce apps may not receive a warm reception in their new target markets.
In recent weeks, complaints have been filed against Temu and Shein in the EU, accusing them of unsavory business tactics. That comes as the bloc prepares a new two-euro flat fee on previously customs-free small packages from online marketplaces like Temu and Shein.
Experts say the new developments could be ominous signs for the platforms, as their business has already suffered from the May closure of a small package tariff exemption in the U.S., as well as new duties at 54%, or $100 for those sent through the postal service.
“As regulatory and trade pressures intensify in the U.S., Temu and Shein are increasingly turning to Europe and the UK as critical growth markets,” Anand Kumar, associate director of research at Coresight Research, told CNBC.
However, Kumar said that the companies have begun to face regulatory headwinds in Europe and the U.K. that echo the scrutiny they’ve encountered in the U.S.
“The EU’s proposed €2 customs fee is more than a minor surcharge—it’s a strategic regulatory move aimed at curbing the unchecked growth of ultra-cheap cross-border e-commerce, and it could reshape how platforms like Shein and Temu operate in Europe over the next 2–3 years,” he added.
Europe pivot
Temu and Shein have boosted their ad spending in Europe, particularly in the U.K. and France, according to a report from Reuters, reflecting their shift away from the U.S.
The growing importance of the EU and U.K. to the two companies has also been reflected in data from Consumer Edge Research, which traces consumer trends based on a sample of credit and debit card info.
According to the data it sent to CNBC, Temu’s consumer spending in the U.S. fell about 36% in May from a year earlier, while Shein’s fell 13% over the same period. The company added that its data shows that some of Temu and Shein’s U.S. customers have shifted their spending toward legacy department stores and fast fashion retailers.
Those trends coincide with data from market intelligence firm Sensor Tower showing that app usage of Temu and Shein in the U.S. is slowing significantly.
However, the opposite trends for the platforms were observed in the U.K. and EU. In May, year-over-year consumer spending growth reached 63% in the EU and 38% in the U.K. Shein experienced growth of 19% in the EU and 42% in the U.K. over the same period.
For Temu, Consumer Edge data showed that growth was especially pronounced in the key market of France, Europe’s second-largest economy.
To capitalize on the momentum in Europe, Temu and Shein have been aggressively expanding their operations across the region, including ramping up warehouse capacity, experimenting with localized business models, as well as significantly increasing digital ad spending in key markets like the U.K., France and Germany, according to Coresight’s Kumar.
“This expansion is not merely opportunistic—it signals a strategic shift in how these companies envision their next phase of growth,” he said.
“That said, the European market is not without its challenges. The region enforces stricter regulations on product safety, consumer protection, and fair competition, all of which require Temu and Shein to invest more in compliance and operational transparency,” he added.
Experts say that those challenges and the EU’s potential duties on small-value packages may be signs of more pressures to come for Temu and Shein.
Scrutiny intensifies
According to French local media, the wording of an “anti-fast fashion” bill, which is under debate in the French National Assembly, was recently rewritten to single out ultra-cheap platforms like Shein and Temu.
The bill, first approved by France’s lower house of parliament in March last year, seeks to penalize fast-fashion products for their environmental impact.
Meanwhile, on Thursday, the pan-European consumer organization BEUC filed a complaint with the European Commission against Shein over its use of deceptive techniques, or “dark patterns” that cause overconsumption.
That comes after the European Commission announced its own investigation into Shein’s compliance with EU consumer law in February and, in May, urged Shein to respect EU consumer protection laws.
BEUC has also filed a complaint against Temu, while 17 of its members filed the same complaint with their competent national authorities, the group said.
Xiaomeng Lu, director of geotechnology at Eurasia Group, told CNBC that the latest scrutiny Temu and Shein are experiencing in the EU is reminiscent of that in the U.S.
“[Temu and Shein] offer cost effective solutions and an efficient supply network that fare well in the fast moving fashion world. However their labor practices and human rights standards may not fully align with high value markets like the EU and U.S.,” Lu said.
That conflict and “rising protectionism” globally are the “key drivers of these regulatory reactions,” she added.
In the U.S., officials had also taken issue with Temu over its alleged non-compliance with the Uyghur Forced Labor Prevention Act (UFLPA), which prohibits the import of goods made with forced labor from China’s Xinjiang region.
According to Coresight’s Kumar, Europe, for its part, is progressing toward stricter oversight through the Corporate Sustainability Due Diligence Directive — which EU member states have until July 2026 to integrate into their national laws.
The directive would compel companies operating in the EU to identify and mitigate human rights abuses in their supply chains, disclose environmental impact and sustainability metrics and face legal consequences for failing to take adequate preventive steps.
That means Temu and Shein will face stringent compliance demands in the EU, Kumar said. However, the region still offers meaningful opportunities for expansion in an increasingly protectionist global trade environment, he added.
Google CEO Sundar Pichai addresses the crowd during Google’s annual I/O developers conference in Mountain View, California on May 20, 2025.
Camille Cohen | AFP | Getty Images
The Google Doodle is Alphabet’s most valuable piece of real estate, and on Tuesday, the company used that space to promote “AI Mode,” its latest AI search product.
Google’s Chrome browser landing pages and Google’s home page featured an animated image that, when clicked, leads users to AI Mode, the company’s latest search product. The doodle image also includes a share button.
The promotion of AI Mode on the Google Doodle comes as the tech company makes efforts to expose more users to its latest AI features amid pressure from artificial intelligence startups. That includes OpenAI which makes ChatGPT, Anthropic which makes Claude and Perplexity AI, which bills itself as an “AI-powered answer engine.”
Google’s “Doodle” Tuesday directed users to its search chatbot-like experience “AI Mode”
AI Mode is Google’s chatbot-like experience for complex user questions. The company began displaying AI Mode alongside its search results page in March.
“Search whatever’s on your mind and get AI-powered responses,” the product description reads when clicked from the home page.
AI Mode is powered by Google’s flagship AI model Gemini, and the tool has rolled out to more U.S. users since its launch. Users can ask AI Mode questions using text, voice or images. Google says AI Mode makes it easier to find answers to complex questions that might have previously required multiple searches.
In May, Google tested the AI Mode feature directly beneath the Google search bar, replacing the “I’m Feeling Lucky” widget — a place where Google rarely makes changes.
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Disposable diapers are a massive environmental offender. Roughly 300,000 of them are sent to landfills or incinerated every minute, according to the World Economic Forum, and they take hundreds of years to decompose. It’s a $60 billion business.
One alternative approach has been compostable diapers, which can be made out of wood pulp or bamboo. But composting services aren’t universally available and some of the products are less absorbent than normal nappies, critics say.
A growing number of parents are also turning to cloth diapers, but they only make up about 20% of the U.S. market.
ZymoChem is attacking the diaper problem from a different angle. Harshal Chokhawala, CEO of ZymoChem, said that 60% to 80% of a typical diaper consists of fossil-based plastics. And half of that is an ingredient called super absorbent polymer, or SAP.
“What we have created is a low carbon footprint bio-based and biodegradable version of this super absorbent polymer,” Chokhawala said.
ZymoChem, with operations in San Leandro, California, and Burlington, Vermont, invented this new type of absorbent by using a fermentation process to convert a renewable resource — sugar — from corn into biodegradable materials. It’s similar to making beer.
“We’re at a point now where we’re very close to being at cost parity with fossil based manufacturing of super absorbents,” said Chokhawala.
The company’s drop-in absorbents can be added into other diapers, which makes it different from environmentally conscious companies like Charlie Banana, Kudos and Hiro, which sell their own brand of diapers.
ZymoChem doesn’t yet have a diaper product on the market. But Lindy Fishburne, managing partner at Breakout Ventures and an investor in the company, says it’s a scalable model.
“Being able to build and grow with biology allows us to unlock a circular economy and a supply chain that is no longer petro-derived, which opens up the opportunities of where you can manufacture and how you secure supply chains,” Fishburne said.
Other investors include Toyota Ventures, GS Futures, KDT Ventures, Cavallo Ventures and Lululemon. The company has raised a total of $35 million.
The Lululemon partnership shows that it’s not just about diapers. ZymoChem’s bio-based materials can also be used in other hygiene products and in bio-based nylon. Lululemon recently said it will use it in some of its leggings, which were traditionally made with petroleum.
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Dylan Field, co-founder and CEO of Figma, appears at the Bloomberg Technology Summit in San Francisco on May 9, 2024.
David Paul Morris | Bloomberg | Getty Images
Design software company Figma filed for an IPO on Tuesday, and plans to trade on the New York Stock Exchange under ticker symbol “FIG.”
The offering would be one of the hotly anticipated IPOs in recent years given Figma’s growth rate and its high private market valuation. In late 2023, a $20 billion acquisition agreement with Adobe was scrapped due to regulatory concerns in the U.K. That led Adobe to pay Figma a $1 billion termination fee.
Revenue in the first quarter increased 46% to $228.2 million from $156.2 million in the same period a year ago, according to Figma’s prospectus. The company recorded a net income of $44.9 million, compared to $13.5 million a year earlier.
As of March 31, Figma had around 450,000 customers. Of those, 1,031 were contributing at least $100,000 a year to annual revenue, up 47% from a year earlier. Clients include Amazon Web Services, Google, Microsoft and Netflix. More than half of revenue comes from outside the U.S.
Figma didn’t say how many shares it plans to sell in the IPO. The company was valued at $12.5 billion in a tender offer last year, and in April it announced that it had confidentially filed for an IPO with the SEC.
Wall Street banks predicted a rush of IPOs after Donald Trump won the U.S. presidential election in November following a dry spell dating back to late 2021, when soaring inflation and rising interest rates pushed investors out of risky assets. While President Trump’s announcement of sweeping tariffs in April roiled markets and led a number of companies to delay their plans, activity has been picking up of late.
Stablecoin issuer Circle doubled in value in its early June debut and is now up more than sixfold from its IPO price for a market cap of almost $43 billion. Online banking company Chime also debuted in June, following Hinge Health’s IPO in May. Artificial infrastructure provider CoreWeave, which went public in March, jumped 46% in June and has quadrupled since its offering.
Buy now, pay later company Klarna, based in the U.K., filed for a U.S. IPO in March, as did ticket marketplace StubHub.
Figma was founded in 2012 by CEO Dylan Field, 33, and Evan Wallace, and is based in San Francisco. The company had 1,646 employees as of March 31.
Before establishing Figma, Field spent over two years at Brown University, where he met Wallace. Field then took a Thiel Fellowship “to pursue entrepreneurial projects,” according to the filing. The two-year program that Founders Fund partner Peter Thiel established in 2011 gives young entrepreneurs a $200,000 grant along with support from founders and investors, according to an online description.
Field is the biggest individual owner of Figma, with 56.6 million Class B shares and 51.1% of voting power ahead of the IPO. He said in a letter to investors that it was time for Figma to buck the “trend of many amazing companies staying privately indefinitely.”
Databricks, SpaceX and Stripe are among high-valued companies that are still private.
“Some of the obvious benefits such as good corporate hygiene, brand awareness, liquidity, stronger currency and access to capital markets apply,” he wrote, explaining the decision. “More importantly, I like the idea of our community sharing in the ownership of Figma — and the best way to accomplish this is through public markets.”
Field added that as a public company, investors should “expect us to take big swings,” including through acquisitions. In April Figma bought the assets and team of an unnamed technology company for $14 million, according to the filing.
The IPO will also mark another much-needed win for Silicon Valley venture firms, which are in need of returns after the multi-year slump. Index Ventures is the largest outside shareholder, with a 17% stake before the offering, according to the filing. Greylock owns 16%, Kleiner Perkins controls 14% and Sequoia has a stake of 8.7%.
Figma said it faces “intense competition” and that loss of market share would “adversely affect our business,” but didn’t name any specific competitors.
Over 13 million people use Figma per month, and only one-third of them are designers, according to the filing. In March the company announced Figma Sites, a tool that turns designs into working websites. It’s one of a few new products that diversify the company away from its collaborative service for crafting app and website designs.
As of March 31, Figma had $1.54 billion in cash, cash equivalents and marketable securities.
Using its cash, Figma has begun investing in digital currencies. In 2024, Figma’s board authorized a $55 million investment into a Bitwise Bitcoin exchange-traded fund. As of March 31, the holding was worth $69.5 million, according to the filing. In May, the board approved a $30 million investment in Bitcoin, and Figma spent the money on USD Coin, which is a stablecoin.
Morgan Stanley and Goldman Sachs are leading the deal along with Allen and Co. and JPMorgan Chase.
Correction: A prior version of this story had the incorrect stock exchange in the headline.
— CNBC’s Ari Levy and Jonathan Vanian contributed to this report.
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