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Chinese bargain retailer Temu changed its US business model on Friday as new rules from the Trump administration took effect.
Recently, Temu has suddenly shifted its website and apps to only display a list of products shipped from US-based warehouses. Items shipped directly from China, which previously covered the site, are now labelled out of stock.
Temu has named himself in the US as a destination for ultra-discount items shipped directly from China, including $5 sneakers and $1.50 garlic presses. The so-called De Minimis rules allowed us to keep prices low.
The loophole expired at 12:01am EDT on Friday as a result of an executive order signed by President Donald Trump in April. Trump temporarily suspended the De Minimis rule in February before reviving the clause a few days later as customs officials struggled to process and collect tariffs in a pile of low-value packages.
As well as the end of De Minimis and Trump’s new 145% tariff in China, they were forced to raise prices to Temu, pause the push for aggressive online advertising, and change the selection of products available to American shoppers to avoid a higher levi.
A Temu spokesman confirmed to CNBC that all US sales are currently being processed by local sellers and said they are being met “from within the country.” Temu said pricing for our shoppers “will not change.”
“Temu is actively recruiting US sellers to join the platform,” the spokesman said. “The move is designed to help local merchants reach more customers and grow their businesses.”
Before the change, shoppers who tried to buy Temu products shipped from China faced “import charges” of 130% to 150%. In many cases, the price is more expensive than individual items, and many orders have more than doubled the price.
Temu advertises local products as “no import fees” and “no additional charges upon delivery.”
A company owned by a Chinese e-commerce giant Holding a PDDOver the past year, they have gradually built inventory in the US in anticipation of escalating trade tensions and elimination of de Minimis.
The scene, which benefited from the loophole, moved to raise prices last week. The first fashion retailer added a banner at check-out. “Dutries are included in the price you pay. There is no need to pay any additional fees when it is delivered.”
Many third party sellers Amazon Rely on Chinese manufacturers to source or assemble products. The company’s Temu competitor, called Amazon Haul, relies on De Minimis to ship products directly from China to the US for under $20
Amazon said Tuesday it considered showing tariff-related costs ahead of the De Minimis cutoff following the dust-up with the White House, but has repealed those plans.
Before Trump took office, the Biden administration was also considering cutting regulations. Critics of De Minimis’ regulations claim that it would harm American businesses and promote the delivery of fentanyl and other illegal substances.
– Gabrielle Fonrouge of CNBC contributed to this report.
Watch: Trump’s tariffs mean higher prices, a huge loss for Amazon sellers
