Shein has warned that rising tariffs and trade barriers have pushed the fast-fashion retailer into a first-quarter loss, highlighting the growing pressure on Chinese-founded ecommerce businesses that depend on cross-border shipping.

The company reported a net loss of $99 million in the first quarter of 2026, compared with net income of $395 million a year earlier, after the United States removed the "de minimis" duty exemption for low-value imports and higher costs weighed on its business. The results were disclosed in a draft prospectus ahead of the company's planned Hong Kong initial public offering.

The retailer said the removal of the US exemption in May 2025 had an "adverse impact" on sales in its largest market, while increasing operating costs. Products shipped from China to US customers now face tax rates ranging from 10 per cent to 87.5 per cent.

Shein said: "In response to the increased duties and taxes, we are pursuing a wide range of options, including increasing our prices in the US market to offset a portion of the increased costs."

The impact is already visible in the company's financial performance. US revenue fell 14.3 per cent year on year to $2.04 billion in the first quarter, reducing the market's share of overall revenue to 22.5 per cent from 29.4 per cent in 2023. The company also warned the European Union's new €3 fee on low-value ecommerce imports could produce similar effects, saying: "Although it remains too early to fully assess, it is possible that trends in the EU could be generally in line with or exceed the impact observed in the U.S. after the removal of the US de minimis exemption."

The filing showed that Shein's net income for 2025 fell 38.7 per cent to $2.06 billion, despite revenue increasing 8 per cent to $41.85 billion as growth slowed and costs rose. The first-quarter loss was partly driven by a $328 million accounting charge linked to the changing value of convertible preferred shares held by investors.

The financial disclosures come as Shein prepares for a Hong Kong stock market listing after abandoned plans to float in New York and London. Reuters reported that the prospectus does not specify the size, pricing or timetable for the offering, although the company received approval from the China Securities Regulatory Commission earlier this month.

The filing also omits specific references to allegations relating to cotton sourced from China's Xinjiang region, referring instead to broader reputational risks.

---