The news: France passed a law imposing fines on ultrafast-fashion companies including Shein and Temu, becoming the first European country to legislate directly against the sector, per The Wall Street Journal.

The law adds to a growing list of regulatory and economic pressures squeezing the platforms on both sides of the Atlantic, from the end of the US de minimis exemption to rising shipping and input costs that are pushing prices higher.

Zooming out: While France may be the first European government to act, it’s unlikely to be the last as legislative momentum builds across the continent.

• Italian lawmakers are pushing to introduce an environmental rating system for clothing, restrict advertising by ultrafast-fashion companies, and impose a levy on low-value parcels shipped from outside the EU.
• Germany has joined France and the Netherlands in calling on the European Commission to tighten EU-wide rules on ultrafast fashion.
• Meanwhile, on July 1, the EU will close its de minimis exemption as it introduces a €3 ($3.43) customs tax on small parcels to attempt to slow the rapid rise in imports from China.

Platforms like Shein and Temu have already begun to adjust to the shifting landscape. After the Trump administration eliminated the de minimis exemption for packages from China and Hong Kong, Temu and Shein doubled down on international expansion. As Europe tightens regulation, the platforms continue to evolve by luring domestic sellers and tapping new revenue streams. Shein, for example, launched its Xcelerator program, opening its on-demand manufacturing network to outside brands, and is purchasing Everlane.

Implications for retailers: Shein and Temu are entering a new phase. With mounting headwinds—from regulatory pressure to eroding price advantages and softer discretionary demand—their era of hypergrowth is likely behind them as the playing field begins to level.

Shein, Temu, and Alibaba/AliExpress are among the most-used ecommerce marketplaces, making them unlikely to disappear. However, as pressure builds, their influence could begin to wane unless they can successfully adapt their models and find new paths to growth.