Direct shipping from China to Temu halted due to elimination of de minimis tariff exemption
Taking a New Leap: How Temu Transforms Its Business Model in the Face of Tariff Changes
Amidst the latest rules by the Trump administration on low-value shipments, Chinese e-commerce platform Temu pivots, drastically altering its website and app to feature only products shipped from U.S.-based warehouses. A shift away from the influx of Chinese goods that previously dominated the site.
Temu, known for its budget-friendly items shipping directly from China, such as $5 sneakers and $1.50 garlic presses, thrived on the de minimis rule that had allowed duty-free entry for items worth $800 or less since 2016. This ending rule became effective on May 1, 2025, as a result of an executive order signed by President Donald Trump in April.
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Temu's alterations include raising prices, scaling back its aggressive online advertising efforts, and streamlining its product offerings for U.S. shoppers to skirt higher taxes. A Temu representative confirmed to CNBC that all American sales now transpire through local sellers, with fulfillment happening "in-country." Despite the changes, pricing for U.S. customers supposedly "remains unchanged."
Before the transformation, customers trying to purchase Temu products shipped from China encountered "import charges" of up to 150%. These fees often outweighed the item's price, and many orders doubled due to the excess charges.
Temu now advertises local products as having "no import charges" and "no extra delivery charges."
The company, owned by Chinese e-commerce giant PDD Holdings, has progressively expanded its U.S. inventory over the past year to prepare for escalating trade tensions and the removal of the de minimis rule.
Shein, another beneficiary of the loophole, raised prices and implemented a tariff notice on orders last week. The fast fashion retailer now displays a checkout banner stating, "Tariffs are included in the price you pay. You will never be charged extra at delivery."
Many third-party sellers on Amazon have also relied on Chinese manufacturers to source their products, including Temu competitor Amazon Haul. However, Amazon Temporarily reconsidered its approach amidst the impending demise of de minimis, considering showing tariff-related costs on Haul products. Nevertheless, it later discarded these plans.
Previously, the Biden administration had also considered curtailing the provision, as critics argue that it hurts American businesses and facilitates shipments of illicit substances. The new regulations aim to level the playing field for domestic companies, which may pose challenges for Temu and Shein in the competitive U.S. market.
- Amidst the changes in tariff rules, Temu, the Chinese e-commerce platform, confirmed that all American sales are now transacted through local sellers with fulfillment happening "in-country."
- In light of the ending de minimis rule, Temu pivoted by raising prices, scaling back its aggressive online advertising efforts, and streamlining its product offerings to skirt higher taxes.
- Before the transformation, customers purchasing Temu products shipped from China encountered import charges of up to 150%, often causing orders to double due to the excess charges.
- Now, Temu advertises local products as having "no import charges" and "no extra delivery charges."
- Similar to Temu, Shein, another beneficiary of the loophole, raised prices and implemented a tariff notice on orders, stating that "Tariffs are included in the price you pay. You will never be charged extra at delivery."
