Chinese bargain retailer Temu adapts to new U.S. trade rules as de minimis loophole ends

In a significant shift to its business approach, Chinese discount retailer Temu has amended its offerings in the U.S. following the conclusion of the de minimis regulation, which allowed low-value shipments under $800 to enter the country duty-free. This change, effective Friday, was prompted by an executive order from former President Donald Trump that aimed to impose stricter tariffs on Chinese goods. As of this implementation, Temu has altered its website and app to only showcase products sourced from U.S.-based warehouses, effectively removing listings that shipped directly from China. Temu made its mark in the U.S. market by attracting consumers with ultra-low prices on everyday items, significantly benefiting from the previous de minimis loophole. Prior to the rule change, many U.S. customers enjoyed bargain prices on items ranging from sneakers to kitchen gadgets, with minimal import costs. Now, however, shoppers attempting to purchase direct-from-China products faced hefty import charges of up to 150%, which could easily exceed the items' price, prompting Temu to pivot towards local sellers to circumvent these tariffs. A spokesperson for Temu has confirmed that this strategic move is designed to support local merchants while enhancing their product visibility and increasing sales. The PR push from Temu emphasizes that local goods come with "no import charges" and "no extra charges upon delivery," aiding in maintaining price competitiveness in a more challenging retail environment. Furthermore, this transition is not isolated to Temu. Competing retailers like Shein have responded similarly by raising prices and restructuring their checkout processes to reflect tariff inclusions. Amazon has also altered its approach on platforms such as Amazon Haul, though they initially planned to disclose tariff-related costs that have now been scrubbed. Prior discussions indicated that the Biden administration might look to continue similar tariff revisions, especially in light of criticism alleging that the de minimis rule undermines American businesses and increases the risk of smuggling illicit goods. As U.S.-China trade relations continue to evolve, companies reliant on cheap imports are now forced to navigate a higher operational cost landscape while attempting to maintain consumer interest amidst growing tariffs and fiscal scrutiny. In summary, this decisive change marks a pivotal moment for Temu and similar companies, indicating that the retail landscape within the U.S. is shifting towards local sourcing to adapt to evolving trade policies. It remains to be seen how this adaptation will impact consumer behavior moving forward and whether the higher prices will deter bargain-conscious shoppers or compel them to seek alternatives. The challenge lies in balancing affordability with compliance as the federal government continues to scrutinize international trade practices, particularly from China.