Jamie Spencer
Chinese online retailer Temu is promoting more products from U.S. warehouses after former President Donald Trump revoked the long-standing de minimis tax exemption. The move, part of a broader tariff increase on Chinese goods, eliminates a duty-free allowance on items under $800, forcing e-commerce giants like Temu and Shein to adapt quickly.
Temu Pushes U.S.-Based Inventory
With the de minimis exemption gone, Temu has rapidly increased its promotion of products labeled with a green “local” badge, indicating inventory stored in U.S. warehouses. This shift:
- Speeds up delivery times for U.S. customers.
- Reduces reliance on direct shipments from China.
- Helps mitigate the impact of new tariffs.
However, many of these “local” listings still show that products are sold by businesses based in China.
Increased Competition with Amazon, eBay, and Walmart
By emphasizing U.S.-based inventory, Temu is entering direct competition with Amazon, eBay, and Walmart, all of which already store Chinese goods in domestic warehouses. Amazon has been closely watching the rise of Temu and Shein, even launching its own budget storefront, Haul, in response.
U.S. Postal Service Suspension Adds to Disruptions
The situation escalated on Tuesday night when the U.S. Postal Service (USPS) 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 but pledged to work with U.S. Customs and Border Protection (CBP) to ensure the new tariffs are enforced without excessive disruption.
Market Volatility for PDD Holdings
The uncertainty surrounding de minimis and tariffs has created volatility for PDD Holdings, Temu’s parent company. The company’s stock price:
- Fell 6% on Monday.
- Rose 8% on Tuesday.
- Dropped more than 3% on Wednesday.
The De Minimis Debate: Fair Trade or Bureaucratic Burden?
The de minimis exemption has been a point of contention in U.S. trade policy:
- Critics argue it gave Chinese companies an unfair advantage and allowed counterfeit and unsafe goods to flood U.S. markets.
- Supporters warn that eliminating it will create logistical chaos and increase government costs.
Hugo Pakula, CEO of supply chain compliance firm Tru Identity, predicted, “At some point, there’s going to be 3 million of these goods piling up a day… Customs isn’t equipped to handle this volume.”
The CBP processed over 1.3 billion de minimis shipments in 2024. A House Select Committee report in 2023 estimated that Temu and Shein were responsible for more than 30% of these shipments.
Shein Expands U.S. Presence
Shein has also taken steps to mitigate the impact of the new restrictions, opening distribution centers in Illinois and California in 2022 and a supply chain hub in Seattle in 2023. The company says these hubs will help “localize and speed up delivery times” for American customers.
Conclusion
With the loss of de minimis, Temu and Shein are racing to adapt, promoting U.S.-based inventory to avoid delays and tariffs. However, the rapid changes in trade policy and customs enforcement are creating uncertainty for businesses and consumers alike. As the situation unfolds, companies that rely on cross-border e-commerce will have to rethink their supply chain strategies to stay competitive.
