In a remarkable turnaround, Temu has made all such direct shipping from China completely halt. This is a big deal given that the de minimis rule, which previously let items valued at $800 or less come in duty-free, has recently expired. This change, effective as of Friday at 12:01 a.m. EDT, follows an executive order signed by former President Donald Trump in April. The former e-commerce platform, owned by Chinese mega PDD Holdings, threw a wide enough net to catch a lot of American consumers looking for deeply discounted goods. Removing the tariff loophole on steel and aluminum has necessitated a powerful strategic realignment.
To grow its inventory, Temu has aggressively courted U.S. sellers to list on its platform. This new move will allow it to better diversify its inventory and get American customers their goods faster. Due to this change in product sourcing, the website and app currently feature only products shipped from U.S.-based warehouses. Product categories that were previously able to be directly ordered and shipped from China are showing up as out of stock.
Shoppers purchasing items sent straight from China often faced high import tariffs. Their accumulated fees were between 130%-150%, which significantly increased the overall cost of their purchases. To ward off this nightmare scenario, Temu has marketed that items from the local market have “no import duty” and “no additional fees upon delivery.” Pricing for U.S. shoppers, it insists, is “not affected,” even with broad price-scuttling strategy switch.
That’s why through the last year, Temu has steadily stocked more and more of its product in the U.S. to make this switch. The platform has been credited for shaking up the competitive landscape within the U.S. market. Its appeal lay in sales almost too good to be true—$5 sneakers! $1.50 garlic presses! Sadly, the pandemic de minimis rule is now at an end. Now, Temu is shifting its shipping strategies with other retailers like Shein and Amazon Haul that have encountered these same tariff pitfalls.
“As we’ve been doing in search of U.S. sellers to onboard onto Temu’s platform,” the Temu spokesperson said. This unmatched national recruitment effort is intended to recruit diverse and top talent at a price point that keeps our work competitive. We hope to recruit consumers who are now facing steeper expenses from increased tariffs.
Our concern is with the end of the de minimis loophole. For their part, the companies have focused their attention on this provision and used it as a defense against keeping prices low for American consumers. Retailers are learning to deal with the new tariffs. In the other direction, Amazon Haul is able to use de minimis rules to move products under $20 directly from China to Americans.
Though it’s hard to believe, Shein recently declared their intention to raise prices. This amendment addresses the increasing expenses tied to new tariffs. Competitive pressure is increasing as these firms work to adapt to changing consumer preferences with increased operational costs.