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The Chinese discount retailer Temu has altered its business strategy in the U.S. following the implementation of new regulations on low-value shipments by the Trump administration.
Recently, Temu’s website and app have transitioned to showcase only products shipped from U.S. warehouses. Products that were previously available from China are now marked as out of stock.
Temu gained popularity in the U.S. for offering extremely low-priced items shipped straight from China, such as sneakers for $5 and garlic presses for $1.50. It managed to maintain these low prices due to the de minimis rule, which allowed products valued at $800 or less to enter the U.S. without duties since 2016.
This loophole ended on Friday at 12:01 a.m. EDT following an executive order signed by President Trump in April. Trump had temporarily suspended the de minimis rule in February, only to restore it shortly after as customs officials struggled with a backlog of low-cost packages needing tariffs.
The conclusion of the de minimis rule, along with Trump’s new 145% tariffs on Chinese goods, has compelled Temu to increase prices, halt its extensive online advertising, and modify the range of products available to U.S. customers to avoid greater tariffs.
A representative from Temu confirmed to CNBC that all U.S. sales are now managed by local sellers and fulfilled “from within the country.” They stated that pricing for American shoppers “remains unchanged.”
“Temu is actively enlisting U.S. sellers to join our platform,” the representative mentioned. “This initiative aims to help local businesses connect with more customers and expand their operations.”
Prior to these changes, customers attempting to buy Temu products shipped from China encountered shocking “import charges” ranging from 130% to 150%, often surpassing the item’s individual cost and significantly inflating the total price of many purchases.
Temu promotes that local products incur “no import charges” and “no additional delivery costs.”
The company, which is a subsidiary of the Chinese e-commerce giant PDD Holdings, has been gradually expanding its inventory in the U.S. over the past year in preparation for increasing trade tensions and the end of the de minimis rule.
Shein, another company that has benefited from the loophole, started raising prices last week. The fast-fashion retailer added a notice at checkout stating, “Tariffs are included in the price you pay. There will be no additional charges upon delivery.”
Numerous third-party sellers on Amazon rely on Chinese manufacturers to supply or produce their items. Temu’s rival, Amazon Haul, has counted on de minimis to deliver products costing $20 or less directly from China to the U.S.
In light of a disagreement with the White House, Amazon announced on Tuesday that it had considered displaying tariff-related costs on Haul products ahead of the de minimis cutoff but has since abandoned those plans.
Before Trump’s second term, the Biden administration had also sought to limit the de minimis provision. Critics of this rule argue that it is detrimental to American businesses and facilitates the shipment of illegal substances like fentanyl since such packages are less likely to be examined by customs officials.
— Report contributed by CNBC’s Gabrielle Fonrouge.
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