US Tariffs Push Shein to $99 Million Q1 Loss

Fast fashion retailer Shein posted a net loss of $99 million in the first quarter of 2026, reversing a $395 million profit in the same quarter last year, as higher import costs, slowing sales and a one-off accounting charge weighed on its financials ahead of its planned Hong Kong initial public offering (IPO).

Shein attributed the lower results mainly to the removal of the “de minimis” duty exemption for low-value imports in the United States, which added significant costs to goods shipped from China.

The change in policy, effective in May 2025, has damaged Shein’s business in the US, its largest market, by raising import duties and slowing sales growth overall.

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Tariff Impact:

Under the old de minimis rule, packages valued at less than $800 could enter the US without paying import duties. The filing states that Shein or its marketplace now has tariffs of 10% to 87.5% on Chinese-origin products that are sold after the policy revision.

This was reflected in the company's performance in the US. First quarter market revenue fell 14.3 percent year-on-year to $2.04 billion, down from $2.38 billion a year ago. The US contributed 22.5% to Shein's quarterly revenue, down from 29.4% of its annual revenue in 2023.

The company is facing growing regulatory pressure in Europe, its second largest market.

This month, the European Union started charging a €3 handling fee on low-value e-commerce imports to counter what regulators say is unfair competition from Chinese online retailers. Shein’s growth could face another obstacle with the new tax, since Europe accounted for about a third of the company’s revenue in 2025.

Shein, a China-founded firm selling fashion products in some 160 countries, is preparing for a listing on the Hong Kong Stock Exchange after previous attempts to list in New York and London failed to materialise.

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IPO Preparations:

The company cleared a major regulatory hurdle when China’s Securities Regulatory Commission approved the Hong Kong listing on July 10.

The draft prospectus did not include the size, pricing or fundraising target of the IPO, but Reuters has previously reported Shein is targeting a valuation of $40 billion to $50 billion.

Proceeds from the proposed offering will be used to enhance the company’s technology capabilities, expand its international presence, build brand awareness, fund corporate responsibility initiatives and for other general corporate purposes, the filing said.

The filing also showed that Shein's pre-IPO investors include IDG Capital, Sequoia Capital, HongShan, Tiger Global, Boyu Capital, Brookfield and General Atlantic.