temu faces new headwinds as tariff loophole closes
Washington, Friday, 2 May 2025.
Temu, the fast-fashion e-commerce giant, is changing its shipping strategy. The company has stopped direct shipments from China to the U.S. This is due to the end of the de minimis tariff loophole. The change could impact prices for consumers. It could also affect semiconductor demand, potentially impacting major chip suppliers. Previously, import charges on Temu products shipped from China ranged from 130% to 150%. Now, Temu is focusing on recruiting U.S. sellers and using local warehouses. Amazon considered a similar move but ultimately scrapped the plan.
impact on consumers and suppliers
The end of the de minimis rule, which allowed duty-free entry for packages valued at $800 or less, took effect today [1]. This change has led Temu to increase prices and add import charges ranging from 130% to 150% on products shipped directly from China [1]. Consumers are already feeling the pinch, with reports of prices on some goods increasing by 40% to 100% [3]. The increased costs and complexities could drive consumers to seek alternatives [3]. The change impacts semiconductor demand, potentially affecting suppliers like Nvidia, ASML, and TSMC [GPT].
temu’s strategic shift
Temu is actively recruiting U.S. sellers to join its platform [1]. The company aims to shift to a “local fulfillment” model [5]. This strategy allows the company to sidestep tariffs and maintain prices for American consumers [5]. A Temu spokesperson stated the move is designed to help local merchants reach more customers and grow their businesses [1]. PDD Holdings Inc., Temu’s parent company, hopes this transition will mitigate the impact of the tariff changes on its U.S. operations [5].
broader market implications
Shein, another major player in the fast-fashion e-commerce sector, also raised prices before today and included tariff costs in the price paid at checkout [1]. This suggests a broader trend in the industry to adapt to the new tariff environment [1]. According to the U.S. Census Bureau, China’s exports of small packages to the U.S. amounted to approximately $5.1 billion in 2024 [2]. This closure of the de minimis loophole could significantly impact the trade relationship between the two countries [2].
expert opinions and potential disruptions
An industry analyst noted that the closure of the de minimis loophole is a significant blow to Temu’s business model [6]. Trade Force Multiplier’s CEO, Alan, stated that the surge in tariff rates from zero to 145% is unsustainable for businesses and customers, potentially leading small and medium-sized enterprises to exit the market [2]. Some retailers have already halted sales to U.S. customers, while others seek temporary solutions [2]. This situation may cause short-term disruptions in the e-commerce landscape [alert! ‘Potential for increased shipping costs from China’].