TikTok Shop Lays Off U.S. E-Commerce Staff Amid Growing Challenges and Strategic Overhaul
TikTok’s parent company, ByteDance, has begun a wave of layoffs across its U.S. e-commerce operations as of May 21, 2025, marking a significant turning point in the company’s efforts to gain a foothold in the American e-commerce market. Employees in E-Commerce U.S. Operations, the U.S. Operations Center, and Global Key Accounts teams were instructed to work remotely ahead of formal notifications about organizational changes.
In an internal memo obtained from TikTok’s Human Resources, executive Mu Qing, who recently assumed control of U.S. e-commerce operations, stated that the company had conducted a "careful analysis" aimed at creating "more efficient operating models" to support long-term growth. However, insiders suggest the situation is more critical than the official messaging reveals.
The layoffs come amid a broader restructuring effort, ongoing performance shortfalls, and intensifying regulatory and trade challenges—including sky-high tariffs on Chinese imports and looming legal mandates that may force ByteDance to divest TikTok’s U.S. operations entirely.
Here is the internal Email sent to the employees affected:
Over the past month, I have taken the opportunity to learn and evaluate how best to support US business in meeting the opportunities and challenges ahead of us. We have undergone careful analysis of how to create more efficient operating models for the team's long-term growth and, as a result, will be communicating organizational and personnel changes to the E-Commerce US Operations, US Operations Center, and Global Key Accounts teams beginning early on Wednesday, May 21 (PT). Our goal is to communicate with employees swiftly and with as much clarity as possible. All updates will be made via your company email, followed by HRBP outreach. To best facilitate these conversations, It is recommended that you work remotely on Wednesday, May 21. We appreciate everyone's patience and understanding as we navigate these difficult discussions. We are committed to supporting our teams throughout this transition with as much compassion and support as possible.”
Key Takeaways
- Layoffs Announced: TikTok began laying off staff in its U.S. e-commerce division on May 21, 2025, focusing on operations and key accounts teams.
- Internal Restructuring: Employees were advised to work remotely as leadership prepared to communicate changes in structure and personnel.
- Trade Pressures: Tariffs on Chinese goods reached as high as 145%, though they’ve been temporarily reduced to 30% during U.S.-China negotiations.
- Sales Decline: TikTok Shop’s U.S. sales dropped 20–25% month-over-month in early May 2025, despite still being up year-over-year from 2024.
- Strategic Pivot: The company is moving away from livestream commerce in the U.S. and emphasizing short-form video integration for better market fit.
- Regulatory Threats: ByteDance faces a June 19, 2025, deadline to divest from TikTok’s U.S. business or face a nationwide ban under U.S. law.
Deep Analysis
TikTok Shop’s U.S. ambitions are faltering—not due to lack of demand, but because of a perfect storm of policy headwinds, cultural mismatches, and organizational inefficiencies.
1. The Tariff Squeeze
Recent U.S. tariffs as high as 145% on Chinese goods decimated the low-margin drop-shipping model many sellers relied on. Although these were lowered to 30% temporarily during negotiations, the damage was already done. Compounding this, the removal of the “de minimis” exemption (which allowed imports under $800 to avoid tariffs) directly hit TikTok Shop’s core value proposition: cheap goods delivered fast.
2. Regulatory Uncertainty
ByteDance is under immense pressure to divest TikTok’s U.S. operations by June 19, 2025, or risk being banned entirely from the market. This legislative overhang deters strategic investment and destabilizes long-term business planning, making it extremely difficult for TikTok Shop to operate with confidence in the U.S.
3. Internal Struggles
An internal all-hands meeting in February 2025 revealed deep frustration from ByteDance executives, who singled out the U.S. e-commerce team for underperformance. The leadership shuffle and layoffs suggest a shift in control back to ByteDance’s China-based executives, which could further widen the gap between the company’s strategies and local market needs.
4. A Shifting Strategy
In China, TikTok’s sister app, Douyin, thrives on livestream commerce—but the U.S. audience hasn’t embraced it the same way. TikTok is now shifting toward short-form video-driven shopping, a format better aligned with American consumer habits. Whether this pivot is coming too late remains to be seen.
Despite the operational pain, TikTok Shop still recorded $100 million in single-day Black Friday sales in 2024 and outperformed competitors like Shein and Temu in U.S. market share. However, these milestones are overshadowed by declining sales, regulatory fog, and structural instability.
Did You Know?
- TikTok Shop drew 47 million U.S. shoppers in 2024 alone, signaling strong potential despite operational issues.
- Americans spent an average of $32 million per day on the platform last year.
- The recent 2025 sales slump only began in late March—suggesting that external forces, not internal demand, triggered the downturn.
- ByteDance’s layoffs follow industry trends: other Chinese-based platforms like Shein have also faced pushback from U.S. regulators, largely around trade compliance and data governance.
- If ByteDance does not divest TikTok’s U.S. business by June 19, 2025, the company could be banned from the American market—an unprecedented move in the global tech landscape.
Final Thoughts
The layoff wave at TikTok Shop is not just a personnel shakeup—it’s a loud signal that ByteDance’s U.S. e-commerce play is in serious trouble. With regulatory pressures intensifying, tariffs squeezing margins, and internal dysfunction undermining progress, the road ahead is riddled with challenges.
Yet, calling it a failure might be premature. If TikTok can adapt quickly—doubling down on content-driven commerce, streamlining its cross-border logistics, and successfully navigating U.S. legal hurdles—there remains a slim but real path to recovery.
For now, though, all eyes are on what happens next: Will product managers and R&D be the next to go? Will ByteDance pull the plug on U.S. e-commerce entirely?
Stay tuned.