Temu Ceases Direct Shipments from China Amid Tariff Surge
New York, Saturday, 3 May 2025.
Temu has stopped shipping goods from China to the U.S. following the closure of a tariff exemption loophole, leading to increased consumer costs and a shift to U.S. suppliers.
Immediate Market Impact
On May 2, 2025, Temu implemented a dramatic shift in its business model, ceasing to display items shipped directly from China and exclusively showing products from U.S. warehouses [2]. This strategic pivot followed earlier warning signs, as the company had begun adding substantial import charges ranging from 130% to 150% on Chinese products earlier in the week [2]. The impact on consumer prices has been significant, with concrete examples showing dramatic increases - a summer dress priced at $18.47 now costs $44.68 after a $26.21 import charge, while a basic handheld vacuum cleaner’s price surged from $16.93 to $40.11 with added fees [3].
Consumer Response and Market Position
The price adjustments have severely impacted Temu’s market position, with the platform falling from its top 10 position to No. 73 in Apple’s app store [3]. Consumer reaction has been notably negative, with customers like Macinzi Morris from Missouri reporting substantial price increases that have eliminated Temu’s competitive advantage [3]. The shift has particularly affected lower-income households, as data shows that approximately 48% of de minimis packages were previously shipped to the poorest zip codes in the U.S., while only 22% went to the wealthiest areas [4].
Strategic Adaptation
In response to these challenges, Temu has actively begun recruiting U.S. sellers to join its platform [1]. The company maintains that local product pricing for U.S. shoppers ‘remains unchanged’ [2], though this claim applies only to items already stored in U.S. warehouses. The broader impact of these changes has extended beyond Temu, as Chinese e-commerce exports to the U.S. have plummeted by 65% in the first three months of 2025 [5], while simultaneously seeing a 28% increase in shipments to the EU [5].
Economic Implications
The termination of the de minimis exemption marks a significant shift in U.S.-China trade relations, affecting a system that processed over one billion packages annually with an average shipment value of $54 in 2023 [6]. Industry experts warn of potential logistics challenges, citing previous instances where short closures of similar loopholes resulted in significant package pileups at borders [6]. This transformation comes as Chinese exports of low-value packages had grown dramatically from $5.3 billion in 2018 to $66 billion in 2023 [4], highlighting the substantial economic impact of this policy change.