Chinese retailer Temu stops direct imports from China as new US trade policies impose higher tariffs on low-cost goods, forcing a complete operational overhaul.
At a Glance
- Temu has halted all direct shipments from China to the US in response to the end of the de minimis exemption
- The company will now work with US-based sellers and use American fulfillment resources
- New tariffs starting at 30% and potentially rising to 50% forced the operational changes
- Temu claims prices for US consumers will remain unchanged despite the new model
- Competitor Shein has not yet announced similar changes to its business model
Temu’s Rapid Response to New Trade Policy
Chinese-owned discount online marketplace Temu has announced it will stop shipping products directly from China to the United States, drastically changing its business model in response to recent changes in US trade policy.
The company, known for ultra-low prices on everything from clothing to household goods, is quickly pivoting to a local fulfillment model using US-based sellers. This strategic shift comes after the US government ended the de minimis exemption that previously allowed duty-free imports of packages valued under $800 from China and Hong Kong.
The de minimis threshold was increased from $200 to $800 in 2015, creating a boom in low-cost direct shipments from China to American consumers. Since its US launch in 2022, Temu has leveraged this policy to offer rock-bottom prices by shipping products directly from Chinese suppliers to American doorsteps. The exemption’s removal now subjects these products to significant new duties, starting at 30% and expected to rise to 50%, making the direct-from-China business model financially untenable.
As the U.S. started applying hefty tariffs on small-value packages from China, bargain site Temu said it stopped shipping products to U.S. consumers directly from the country, a dramatic shift https://t.co/yMlfwimmXm
— The Wall Street Journal (@WSJ) May 2, 2025
Building a Domestic Network
Temu has been actively recruiting American merchants to join its platform, allowing the company to maintain its marketplace model while complying with the new trade regulations. “We are committed to supporting US businesses and helping them reach more customers through our platform,” the company stated in its announcement. This transition will see US sales handled exclusively by locally based sellers, with fulfillment occurring within American borders rather than through direct international shipments.
The company has assured customers that despite the operational changes, prices will remain competitive compared to traditional US retailers. Industry analysts note this represents a significant logistical challenge for Temu, which previously relied on its parent company PDD Holdings’ extensive supply chain relationships in China to source ultra-low-cost products. The new model will require building entirely new domestic vendor relationships and establishing US-based inventory and fulfillment operations nearly from scratch.
Scoop: Temu Asks China-based Merchants to Fulfill Orders On Their Own
Rising tariffs have forced Temu to shift its US shipping model, requiring China-based merchants to now fulfill orders directly.
Read more 👇 https://t.co/LMSDk4TwmJ
— The Information (@theinformation) May 2, 2025
Broader Impact on US-China Trade Relations
The end of the de minimis exemption represents another escalation in ongoing trade tensions between the United States and China. The exemption’s removal specifically targets e-commerce platforms like Temu and Shein that have gained significant market share in recent years through their direct-to-consumer model using Chinese suppliers. US officials have expressed concerns that these platforms were exploiting a loophole in trade policy that was originally intended for occasional personal purchases, not systematic commercial operations.
While Temu has announced its operational pivot, competitor Shein has remained silent on specific changes to its business model. Shein has only stated it maintains “all-in pricing with no additional fees,” leaving questions about how it will address the new tariffs. The divergent responses highlight the complex calculations companies must make when navigating rapidly shifting trade policies. Some analysts speculate Shein may absorb tariff costs temporarily or pursue alternative shipping arrangements through countries not subject to the same restrictions.
BREAKING: Chinese company Temu stops all direct shipments from China to the United States in response to new tariffs
— The Spectator Index (@spectatorindex) May 2, 2025
Consumer Impact and Market Outlook
Despite Temu’s assurances of unchanged pricing, retail analysts question whether the company can maintain its extreme discount model without direct Chinese sourcing. The typical Temu order costs between $15-30, significantly below traditional retail prices for comparable items. While the company claims its new domestic model will preserve these price points, the economics of US-based fulfillment typically involve higher labor, warehousing, and transportation costs than direct international shipping.
For American consumers who have embraced these ultra-discount platforms, the trade policy changes could eventually lead to higher prices or reduced selection. However, domestic retailers who have struggled to compete with the low-cost imports may see new opportunities as the playing field levels. The development also represents a test case for how quickly global e-commerce platforms can adapt to major regulatory changes and whether their business models can survive significant shifts in international trade policy.
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