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Chinese bargain retailer Temu modified its business model within the U.S. because the Trump administration’s recent rules on low-value shipments took effect Friday.
In recent days, Temu has abruptly shifted its website and app to only display listings for products shipped from U.S.-based warehouses. Items shipped directly from China, which previously blanketed the positioning, are actually labeled as out of stock.
Temu made a reputation for itself within the U.S. as a destination for ultra-discounted items shipped direct from China, corresponding to $5 sneakers and $1.50 garlic presses. It has been in a position to keep prices low due to so-called de minimis rule, which has allowed items price $800 or less to enter the country duty-free since 2016.
The loophole expired Friday at 12:01 a.m. EDT because of this of an executive order signed by President Donald Trump in April. Trump briefly suspended the de minimis rule in February before reinstating the availability days later as customs officials struggled to process and collect tariffs on a mountain of low-value packages.
The top of de minimis, in addition to Trump’s recent 145% tariffs on China, has forced Temu to lift prices, suspend its aggressive internet marketing push and now alter the number of goods available to American shoppers to bypass higher levies.
A Temu spokesperson confirmed to CNBC that every one sales within the U.S. are actually handled by local sellers and said they’re fulfilled “from throughout the country.” Temu said pricing for U.S. shoppers “stays unchanged.”
“Temu has been actively recruiting U.S. sellers to hitch the platform,” the spokesperson said. “The move is designed to assist local merchants reach more customers and grow their businesses.”
Before the change, shoppers who attempted to buy Temu products shipped from China were confronted with “import charges” of between 130% and 150%. The fees often cost greater than the person item and greater than doubled the worth of many orders.
Temu advertises that local products have “no import charges” and “no extra charges upon delivery.”
The corporate, which is owned by Chinese e-commerce giant PDD Holdings, has step by step built up its inventory within the U.S. over the past yr in anticipation of escalating trade tensions and the removal of de minimis.
Shein, which has also benefited from the loophole, moved to lift prices last week. The fast-fashion retailer added a banner at checkout that claims, “Tariffs are included in the worth you pay. You may never must pay extra at delivery.”
Many third-party sellers on Amazon depend on Chinese manufacturers to source or assemble their products. The corporate’s Temu competitor, called Amazon Haul, has relied on de minimis to ship products priced at $20 or less directly from China to the U.S.
Amazon said Tuesday following a dustup with the White House that had it considered showing tariff-related costs on Haul products ahead of the de minimis cutoff but that it has since scrapped those plans.
Prior to Trump’s second term in office, the Biden administration had also looked to curtail the availability. Critics of the de minimis provision argue that it harms American businesses and that it facilitates shipments of fentanyl and other illicit substances because, they are saying, the packages are less more likely to be inspected by customs agents.
— CNBC’s Gabrielle Fonrouge contributed to this report.
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