Temu Ends China-US Shipments—What’s Ahead?

Overview of Temu’s Business Model

Temu, a subsidiary of PDD Holdings, has shaken up the American e-commerce market since its launch in September 2022. The company’s approach is built on a direct-to-consumer model, which eliminates intermediaries and allows for lower retail prices. By early 2024, Statista reported that Temu’s user base in the U.S. had soared past 30 million, underscoring its appeal among budget-conscious shoppers. The platform made headlines by offering everything from electronics to apparel at prices often lower than established competitors. Its rapid growth led to scrutiny, especially as most of its products were shipped directly from Chinese factories. The recent move to halt China-US shipments marks a dramatic shift for a company that has relied heavily on Chinese supply chains. This development is forcing Temu to rethink how it delivers value to its vast customer base.

Temu Halts Direct Shipments from China to U.S.

As of May 2, 2025, Temu, the Chinese e-commerce platform owned by PDD Holdings, has ceased direct shipments from China to U.S. consumers. This decision follows the termination of the U.S.’s “de minimis” rule, which previously exempted imports under $800 from duties. With the exemption revoked, low-value Chinese imports now face a 120% tariff or a flat $100 fee, doubling in June. Temu’s U.S. marketplace will now fulfill all sales through domestic sellers, a significant shift likely to impact its market scale.

Impact of De Minimis Rule Termination

The “de minimis” exemption, a 1938 law, allowed packages valued under $800 to enter the U.S. duty-free. This provision was heavily utilized by companies like Temu and Shein to offer low-cost goods directly to American consumers. In 2024, 1.36 billion shipments entered the U.S. under this exemption, nearly doubling from 637 million in 2020. The closure of this loophole is expected to burden small businesses and consumers with potential price increases of up to 30%, totaling an estimated $22 billion annually.

Temu’s Transition to U.S.-Based Fulfillment

In response to the policy change, Temu has shifted its U.S. operations to a local fulfillment model. All U.S. sales are now handled by domestic sellers, with orders fulfilled from within the country. Temu has been actively recruiting U.S. sellers to join the platform, aiming to help local merchants reach more customers and grow their businesses. The company states that pricing for U.S. shoppers remains unchanged, although experts suggest the imposition of import fees and taxes could raise costs significantly—potentially over 100% of a product’s value.

Consumer Price Increases and Shipping Delays

With the termination of the de minimis exemption, consumers are experiencing higher prices and shipping delays. For instance, an $18.47 dress on Temu now costs $44.68 after import charges. The U.S. Postal Service will charge 120% or a flat fee per package. While the rule change challenges many, U.S.-based manufacturers and brands may benefit as competition from cheaper Chinese imports diminishes.

Broader Implications for E-Commerce Platforms

The end of the de minimis exemption has significant implications for e-commerce platforms that relied heavily on this provision to offer competitive pricing to U.S. consumers. As these platforms adjust their business models, consumers may experience higher prices and changes in product availability. The closure of the de minimis loophole is expected to have a ripple effect across the e-commerce industry, prompting other companies to reevaluate their pricing strategies and supply chain operations.

Temu’s Efforts to Recruit U.S. Sellers

Temu has been actively recruiting U.S. sellers to join the platform, aiming to help local merchants reach more customers and grow their businesses. The company states that pricing for U.S. shoppers remains unchanged, although experts suggest the imposition of import fees and taxes could raise costs significantly—potentially over 100% of a product’s value.

Potential for Increased Domestic Manufacturing

The termination of the de minimis exemption and the imposition of tariffs may incentivize companies to increase domestic manufacturing. By producing goods within the U.S., companies can avoid import fees and reduce shipping times. This shift could lead to job creation and economic growth within the country. However, it may also result in higher production costs, which could be passed on to consumers.

Future Outlook for U.S.-China E-Commerce Relations

The recent policy changes mark a significant shift in U.S.-China e-commerce relations. As the U.S. government seeks to protect domestic industries and address concerns over illicit shipments, Chinese e-commerce platforms like Temu and Shein must adapt their business models. The long-term impact of these changes remains to be seen, but they underscore the importance of flexible supply chains and diversified sourcing strategies in the evolving global trade landscape.