Temu steers users to ‘local’ products after Trump shuts tax loophole – CNBC

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Trump on Saturday suspended the exemption as part of new tariffs that include an additional 10% tax on Chinese goods.De minimis has helped propel Temu and Shein’s explosive growth in the U.S. by allowing the companies to bypass taxes on low-value shipments, and sustain their rock-bottom prices on everything from shoes and clothes to furniture and electronics.With the tariff exemption gone, Temu has significantly ramped up its promotion of sellers who have inventory in U.S. warehouses, rather than items that are shipped direct from China. A scan of listings in Temu’s “Lightning deals” section shows that it’s almost entirely dominated by products with a green “local” badge.By promoting local inventory, Temu’s products not only arrive faster to shoppers’ doorsteps, but the company also reduces its reliance on sellers who ship direct from China. Even though the products are stored in U.S. warehouses, many local listings state that the items are sold by businesses based in China.Representatives from Temu didn’t respond to requests for comment.Temu’s promotion of U.S.-based products also puts it in more direct competition with Amazon, eBay and Walmart, which have also signed up sellers in China who ship goods overseas to their warehouses. Amazon last year took notice of Temu and Shein’s dramatic growth in the U.S. when it launched its own budget storefront, called Haul.Temu, which is owned by Chinese online retailer PDD Holdings, began onboarding sellers with inventory in U.S. warehouses in March. By July, roughly 20% of Temu’s U.S. sales came from those sellers, not merchants based in China, according to e-commerce market research firm Marketplace Pulse.Temu, Shein and other Chinese e-commerce companies are trying to minimize the level of disruption to their services as they face new, more stringent customs requirements. They were thrown into further chaos on Tuesday night when the U.S. Postal Service abruptly announced it was suspending inbound packages from China and Hong Kong “until further notice.”Less than 12 hours later, the USPS reversed its decision, and resumed accepting packages from those regions. The agency also said it would work with U.S. Customs and Border Protection to “implement an efficient collection mechanism for the new China tariffs to ensure the least disruption to package delivery.”The uncertainty has created volatility for PDD’s stock price which fell 6% on Monday, rose 8% on Tuesday and fell more than 3% on Wednesday. Critics of the de minimis provision say it’s provided an unfair advantage to Chinese e-commerce companies, and created an influx of packages that are “subject to minimal documentation and inspection,” raising concerns around counterfeit and unsafe goods.Others have advocated for the de minimis exemption to remain in place, saying its removal would burden customs officials and lead to higher government costs.”At some point there’s going to be 3 million of these goods piling up a day and customs can do their best, but they’re not equipped,” said Hugo Pakula, CEO of supply chain compliance company Tru Identity. “They have to do 10x more screenings this week than last week.”CBP has said it processed more than 1.3 billion de minimis shipments in 2024. A 2023 report from the House Select Committee on the Chinese Communist Party found that Temu and Shein are “likely responsible” for more than 30% of de minimis shipments into the U.S.Shein has also been courting U.S. buyers and sellers. The company opened distribution centers in states including Illinois and California in 2022, and a supply chain hub in Seattle last year. The company said the Seattle hub would enable it to “localize and support speedier delivery times for American consumers.”WATCH: Amazon Haul takes on TemuGot a confidential news tip? We want to hear from you.Sign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services.© 2025 CNBC LLC. All Rights Reserved. A Division of NBCUniversal
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Source: https://www.cnbc.com/2025/02/05/temu-steers-users-to-local-products-after-trump-ends-de-minimis.html