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Temu has stopped shipping low-cost items from China directly from China as Chinese e-commerce companies overhaul their business model in response to the Trump administration’s tariffs.
Temu’s sales in the US market — selling household goods from phone chargers to silicone toilet brushes — said Friday that everything will be met from US-based sellers, not Chinese sellers.
The company has built a network of sellers in the US for over a year, but has actively recruited more merchants in the country. However, the decision to throw away Chinese sellers means that the US business can be significantly reduced as a result.
The change came as the US scrapped “minimum” customs regulations and exempts inbound plots below $800 from import duties.
Starting on Friday, low-value shipments from China and Hong Kong will be subject to a 120% tariff or flat $100 charge, depending on the delivery method of the product. The $100 price will double from June 1st.
The sudden change poses a major challenge for Temu and its rival Shein. Both retailers took advantage of the “minimum” exemption to undercut US retailers using cheap Chinese-made products shipped directly to consumers.
The Financial Times reported this week that it was investigating whether Shein will shift production from China for its US business, and that it is investigating the much-anticipated London stock market floats likely to be further delayed due to tariff changes. The fast fashion retailer’s US business accounts for about a third of $38 billion in revenue.
Analysts estimate that the US is Temu’s largest market, owned by Chinese company PDD Holdings.
“Temu pricing for US consumers has not been changed as the platform moves to a local fulfillment model,” the company said. “This move is designed to help local merchants reach more customers and grow their businesses. This shift is part of Temu’s ongoing adjustments to improve service levels.”
Temu and Shein are two prominent victims of the US-China trade war. Washington imposes tariffs of up to 145% on most Chinese products, while China is retaliating with a tariff of 125%.
Temu and Shein, who have driven rapid growth with blanket social media ads, have responded by reducing ad spending in recent weeks.
Chinese authorities on Friday indicated that Beijing is “evaluating” a recent overture from the US to launch trade talks. Beijing previously suggested that if Washington wanted to work, it should drop the sudden collection.
