A Temu package is displayed in front of a screen showcasing the Temu logo. (Photo by Nikos Pekiaridis/NurPhoto via Getty Images)
Chinese online retailer Temu is increasingly featuring products in its app that can be shipped from U.S. warehouses following former President Donald Trump’s recent decision to eliminate a well-known tax loophole. The de minimis exemption, which has been around for nearly a century, allowed many e-commerce businesses to import goods valued under $800 into the U.S. without incurring duties. On Saturday, Trump announced the suspension of this exemption as part of new tariffs that introduced an additional 10% tax on imports from China.
The de minimis rule has significantly contributed to the rapid expansion of Temu and Shein in the U.S. market by enabling these companies to avoid taxes on low-value shipments, allowing them to maintain their extremely low prices on a wide range of products including apparel, footwear, furniture, and electronics. With the removal of the tariff exemption, Temu has notably increased its focus on promoting sellers with inventory stored in U.S. warehouses, shifting away from items shipped directly from China. A review of the “Lightning deals” section in Temu’s app reveals that it is predominately filled with products marked with a green “local” badge.
By emphasizing local inventory, Temu ensures that products reach customers more quickly while also decreasing its reliance on vendors shipping directly from China. Interestingly, although many items are stored in U.S. warehouses, some local listings indicate that they are sold by businesses operating out of China. Representatives from Temu have not provided comments regarding these changes.
The push for U.S.-based products positions Temu in direct competition with established players like Amazon, eBay, and Walmart, all of which have enlisted Chinese sellers who ship goods to their own U.S. warehouses. Amazon took notice of the significant growth of Temu and Shein in the U.S. market last year and responded by launching its budget storefront, Haul.
Temu, part of Chinese retailer PDD Holdings, began onboarding sellers with U.S. warehouse inventory in March. By July, reports indicated that approximately 20% of Temu’s U.S. sales originated from these domestic sellers rather than those based in China, according to the e-commerce market research firm Marketplace Pulse.
Amidst new customs regulations, Temu, Shein, and other Chinese e-commerce platforms are striving to mitigate service disruptions. A recent chaotic moment occurred when the U.S. Postal Service announced a suspension of inbound packages from China and Hong Kong, only to reverse the decision within hours. The USPS stated it would collaborate with U.S. Customs and Border Protection to establish an efficient collection mechanism for the new tariffs, aiming to minimize disruptions to package deliveries.
This uncertainty has resulted in fluctuations in PDD’s stock price, which dropped 6% on Monday, rose 8% on Tuesday, and fell over 3% on Wednesday. Critics of the de minimis provision argue that it has given an unfair edge to Chinese e-commerce companies and contributed to an influx of packages that could evade thorough documentation and inspection, raising concerns about counterfeit and unsafe products. Conversely, advocates for the de minimis exemption argue that its removal would place additional burdens on customs officials, potentially escalating government costs.
Hugo Pakula, CEO of supply chain compliance firm Tru Identity, expressed concerns over the impending volume of shipments, saying, “At some point, there’s going to be 3 million of these goods piling up a day, and customs can do their best, but they’re not equipped.” According to Customs and Border Protection (CBP), over 1.3 billion de minimis shipments were processed in 2024. A report from the House Select Committee on the Chinese Communist Party in 2023 indicated that Temu and Shein might be responsible for over 30% of de minimis shipments entering the U.S.
Shein is also actively seeking to attract U.S. customers and sellers, having opened distribution centers in states such as Illinois and California in 2022, along with establishing a supply chain hub in Seattle last year to facilitate quicker delivery times for American consumers.
