How Tariff Changes Could Disrupt Digital Advertising and E-commerce

A potential shift in trade policy is creating uncertainty in the digital advertising and e-commerce sectors. The proposed 10% tariffs on Chinese imports, combined with the suspension of the de minimis rule – which previously allowed shipments under $800 to enter the US duty-free – could force major Chinese e-commerce platforms like Temu and Shein to rethink their strategies.

These platforms have spent heavily on digital advertising, particularly on Google, Facebook, Instagram, and YouTube, to fuel their rapid expansion in the US market. But if tariffs increase costs, their aggressive marketing budgets may be one of the first things to take a hit. The knock-on effect could ripple across the digital advertising ecosystem, impacting platforms that rely on these brands for ad revenue, as well as affiliate marketers who generate income by promoting their products.

Why Temu and Shein Have Been Dominating Digital Ads

In recent years, Shein and Temu have built their brands through a relentless push on social media and search ads. They have perfected a business model that relies on low-cost production, direct-to-consumer shipping, and high-volume digital marketing. By using targeted ads and algorithm-driven product recommendations, they have been able to drive huge sales without the need for physical stores.

Meta and Google have benefited significantly from their ad spend. Reports suggest that up to 4% of Meta’s total ad revenue comes from Chinese e-commerce companies, with Temu alone spending billions of dollars on user acquisition. This has made them some of the biggest advertisers in the US digital space, outpacing even traditional retail giants.

If tariffs force these companies to raise prices or absorb additional costs, they may need to reduce their ad spending to compensate. This could create gaps in ad revenue for major tech platforms, potentially shifting the balance of digital ad competition.

How Tariffs Could Reshape Digital Marketing Strategies

If Shein and Temu adjust their budgets, the digital ad space could open up to new players. Other e-commerce brands – particularly US-based retailers – may see an opportunity to take advantage of lower competition in ad auctions. This could lead to a reshuffling of paid advertising strategies, as other brands step in to fill the void left by Chinese retailers.

Affiliate marketing could also be impacted. Many influencers, bloggers, and content creators rely on affiliate partnerships with Temu and Shein to generate commission-based income. If these companies pull back on their affiliate programmes, creators may need to pivot towards other brands, reshaping the affiliate marketing landscape.

Another potential outcome is that Chinese e-commerce brands adjust their logistics and supply chains to maintain profitability. Instead of shipping directly to US customers from overseas, they may set up domestic fulfilment centres or work with third-party logistics providers to bypass the de minimis rule. If this happens, their pricing structures may shift, and their marketing tactics may evolve to focus more on long-term brand loyalty rather than purely impulse-driven purchases.

Broader Implications for the Digital Advertising Industry

This shift could force major advertising platforms to diversify their revenue streams. Google, Meta, and TikTok have grown accustomed to high ad spending from fast-fashion and budget e-commerce companies. If that declines, they may need to incentivise other sectors to increase their advertising investments.

Retailers in categories like home goods, beauty, and electronics may take advantage of this situation, increasing their digital ad spend to capture consumers who previously bought from Shein and Temu. Similarly, established US brands that have been losing ground to low-cost Chinese competitors may see this as a chance to reassert their presence in the market.

For consumers, the changes could lead to higher prices on popular online marketplaces, particularly for budget-conscious shoppers who have come to rely on the ultra-low prices that Shein and Temu offer. At the same time, the shift may create more opportunities for small and mid-sized brands to stand out in a less crowded ad market.

What Happens Next?

The impact of these proposed tariffs will depend on whether they are fully implemented and how quickly companies adjust. If Chinese e-commerce brands find alternative ways to maintain low prices, their digital advertising strategies may not change significantly. However, if they struggle to offset the higher costs, their marketing budgets could shrink, affecting ad revenue across multiple platforms.

For digital marketers, advertisers, and affiliate partners, this situation highlights the volatility of global trade policies and their direct impact on online business models. Marketers who are prepared to adapt – whether by diversifying ad strategies, exploring new affiliate partnerships, or shifting to different product categories – will be in the best position to navigate these changes.

As e-commerce continues to evolve, companies that remain agile and responsive to policy shifts will have the greatest chance of maintaining a competitive edge in an uncertain market.