Temu Adjusts U.S. Operations as De Minimis Exemption Ends
Temu shifts to U.S. warehouses following the expiration of the de minimis loophole, raising consumer prices on previously low-cost imports from China.
Summary
As of May 2, 2023, Temu has updated its U.S. business model by exclusively showcasing products shipped from local warehouses, following the end of the de minimis rule. The rule had enabled low-value goods from China to be imported duty-free, fostering ultra-low pricing on items like sneakers and kitchen gadgets. However, recent executive orders have imposed tariffs up to 145%, forcing Temu to suspend its aggressive advertising and raise prices slightly, although it claims that local products incur no extra charges. Shein has similarly adjusted its pricing strategy in light of these changes, indicating broader impacts on U.S. consumer costs.
Sources (6)
- The de minimis loophole closure has been framed as a necessary step by the Trump administration to end what they called a 'big scam' benefitting foreign sellers, while in reality, it disproportionately impacts American consumers by raising prices.
- Industry groups have expressed concern that closing this loophole will not only increase costs for consumers but also hurt competition against U.S. businesses that have relied on affordable imports for their product offerings, now further complicated by e-commerce companies shifting to local models that may not alleviate price hikes.
- Critics argue that the closure of the loophole may not effectively address issues of drug trafficking since most fentanyl entering the U.S. now comes via the Mexico border, rather than through low-value imports.
CNN·19d· "…The change is a major shift for the platform."
Wired·19d· "…Trump’s blanket 145 percent tariffs on Chinese imports are having wide impacts on almost every industry, whereas the change to de minimis specifically hurts platforms like Temu and Shein."
The Guardian·20d· "…As of Friday, parcels worth less than $800 will be subject to a 120% levy or a flat fee of $100, rising to $200 from June."
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- 19d