17 hours Ago By PYMNTS
Temu has reportedly stopped shipping products from China directly to U.S. consumers due to the elimination of the de minimis exemption that had shielded small packages from U.
S. tariffs.“This shift is part of Temu’s ongoing adjustments to improve service levels,” a Temu spokesperson told the Wall Street Journal (WSJ) in a report posted Friday (May 2).
This marks a “dramatic shift” in the company’s business model, the report said.Temu had rapidly grown its business in the U.S.
by sending small, inexpensive items from China to U.S. consumers, avoiding duties on the items by keeping each package below the threshold specified by the de minimis exemption, according to the report.
However, President Donald Trump ordered in April that the exemption for goods made in China and Hong Kong be eliminated by Friday (May 2), per the report.Temu initially responded to this move by saying that it would raise prices and display the import changes, which often exceeded the price of the item, the report said.More recently, however, the company started offering only goods that were already in the U.
S. and would be shipped to consumer from a U.S.
warehouse. It labeled these items as “local,” per the report.With this move, Temu has already lost much of its price advantage, and it will face additional challenges when its inventory in the U.
S. is sold out, according to the report.Like other businesses that rely on goods manufactured in China, Temu is likely to hope for a reversal of tariffs in the U.
S. or face further changes to its business model in the future, the report said.It was reported in February that Temu began overhauling its Chinese supply chain after the announcement of new U.
S. tariffs. The company began asking factories to ship their own goods in bulk to U.
S. warehouses while it shifted to only managing its online marketplace.In September, it was reported that over the previous decade, the number of shipments claiming the de minimis exemption had risen from 140 million a year to over 1 billion a year, with most of those shipments coming from several China-founded eCommerce platforms.
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