TikTok Shop has initiated layoffs of U.S. staff as part of “organizational and personnel changes” affecting e-commerce operations, global key accounts, and U.S. operations teams, according to an internal memo viewed by Business Insider. 

The restructuring follows “careful analysis of how to create more efficient operating models,” wrote e-commerce executive Mu Qing.

Affected employees received exit packages that included two months of administrative leave plus tenure-based severance. The company advised staff to work remotely on Wednesday, May 21, as layoff notifications were delivered via email.

Business Insider notes that TikTok Shop’s U.S. business faces significant headwinds in 2025, with sales declining amid global tariffs and economic uncertainty. Daily U.S. sales from foreign sellers, particularly those based in China, have dropped approximately 25% month-over-month in early May.

This follows April’s spike in tariffs on Chinese goods to as high as 145%, though the U.S. has since temporarily reduced these to 30% while China lowered its levies on U.S. imports from 125% to 10%.

Restructuring as Divestiture Deadline Looms

The current layoffs represent TikTok’s second staff reduction in recent months, following April’s restructuring of its e-commerce governance and experience team. The company also declared more than 250 employees in Ireland redundant.

The platform’s U.S. growth remains a priority for parent company ByteDance, which generates hundreds of billions in annual sales on Douyin, TikTok’s Chinese counterpart. However, as Business Insider points out, TikTok Shop failed to meet many of its 2024 performance goals, as company leaders acknowledged during a February all-hands meeting.

TikTok faces a June 19 deadline to find a new owner in the U.S. or face a potential nationwide ban, though President Trump has indicated he may extend this timeline. Potential bidders include Oracle co-founder Larry Ellison, AI startup Perplexity, AppLovin, Amazon, and a consortium led by former L.A. Dodgers owner Frank McCourt Jr.

Despite regulatory challenges, TikTok Shop has demonstrated strong consumer engagement, with PartnerCentric research showing 37% of TikTok users having made purchases through the platform in the past six to eight months, spending an average of $59 per transaction.