Fast fashion retailer Shein disclosed in its initial public offering (IPO) filings that its sales in the U.S. market have declined due to new tariff policies forcing it to raise prices to offset costs. The company warned that a similar situation could unfold in the European market, posing a threat to its low-price business model.

Shein stated in the filings that starting in May 2025, the company began passing on most of the additional tariff costs to U.S. consumers, which negatively impacted net revenue in the U.S. market for the remainder of 2025. Between 2024 and 2025, Shein's revenue in the U.S. dropped by over 3%, with first-quarter sales plummeting 14% year-over-year.

In Europe, the EU recently abolished the tax exemption for low-value parcels and implemented a new flat rate, which Shein expects could have an even greater impact on its profitability. In 2025, the European market contributed 35% of Shein's revenue. Angela Lee, a professor at Columbia Business School, pointed out that these regulatory changes pose a serious risk to Shein's business model because its core competency lies in low prices, and this advantage is disappearing. Faced with slowing growth and profit pressure, Shein is striving to develop third-party marketplaces and commercialize its supply chain services, with these high-margin businesses growing by nearly 40% in 2025.