Temu, the Chinese e-commerce platform, is shifting its focus to products shipped from U.S. warehouses after President Trump revoked a key tax exemption.

The nearly century-old de minimis rule allowed goods valued under $800 to enter the U.S. duty-free. This policy helped fuel the rapid expansion of Temu and Shein in the U.S. by keeping product prices low. However, on Saturday, Trump eliminated this exemption as part of broader tariffs, which now impose an additional 10% tax on Chinese imports.

Following this change, Temu has significantly increased its promotion of products stocked in U.S. warehouses. The “Lightning Deals” section of its app is now dominated by items marked with a green “local” badge. By emphasizing local inventory, Temu not only accelerates delivery times but also reduces its reliance on direct shipments from China.

Despite being stored in the U.S., many of these “local” products are still sold by China-based businesses. Temu has yet to issue an official statement regarding its strategy shift.

This adjustment also places Temu in more direct competition with Amazon, eBay, and Walmart, all of which already work with Chinese sellers to ship goods to their warehouses before distributing them to U.S. customers. Amazon, in particular, took notice of Temu and Shein’s rising popularity, launching its budget-focused storefront, Haul, last year.

Temu, owned by PDD Holdings, began onboarding U.S.-based sellers with warehouse inventory in March. By July, approximately 20% of its total U.S. sales came from these sellers rather than China-based merchants, according to e-commerce research firm Marketplace Pulse.

Meanwhile, Temu and other Chinese e-commerce firms are striving to minimize disruptions as they face tighter customs regulations. The situation escalated further on Tuesday night when the U.S. Postal Service (USPS) unexpectedly announced a suspension of inbound shipments from China and Hong Kong “until further notice.”

Less than 12 hours later, USPS reversed its decision and resumed package acceptance from those regions. The agency stated it would collaborate with U.S. Customs and Border Protection to implement a streamlined process for collecting the new tariffs while minimizing delivery disruptions.

The ongoing uncertainty has caused volatility in PDD Holdings' stock price, which dropped 6% on Monday, rebounded 8% on Tuesday, and fell over 3% again on Wednesday.

Critics of the de minimis rule argue that it provided an unfair advantage to Chinese retailers and led to an influx of poorly documented imports, raising concerns over counterfeit and unsafe goods.

On the other hand, some advocate for keeping the exemption, arguing that its removal places an additional burden on customs officials and increases government costs.

“There will be 3 million packages piling up daily, and customs will do their best, but they aren’t equipped,” said Hugo Pakula, CEO of supply chain compliance firm Tru Identity. “They have to conduct 10 times more screenings this week than last week.”

U.S. Customs and Border Protection reported processing over 1.3 billion de minimis shipments in 2024. A 2023 report by the House Select Committee on the Chinese Communist Party found that Temu and Shein were likely responsible for more than 30% of these shipments.

Shein has also been strengthening its foothold in the U.S. The company established distribution centers in Illinois and California in 2022 and opened a supply chain hub in Seattle last year. Shein stated that the Seattle hub would help localize its operations and speed up delivery times for American customers.

SOURCE: CNBC | PHOTO: SHUTTERSTOCK

This article was created with AI assistance.