Temu, a leading online marketplace, has announced a major strategic change. The platform will no longer sell goods imported directly from China to U.S. customers. Instead, all U.S. sales will now be handled by locally based sellers, with orders fulfilled domestically. The move comes as Temu shifts U.S. operations to adapt to changes in the de minimis exemption, a U.S. trade rule that previously allowed low-value packages (under $800) to bypass import duties and taxes.
The de minimis exemption, originally introduced in 1938, was intended to simplify customs processing for small shipments. Over time, platforms like Temu and competitor Shein leveraged this rule to offer ultra-low prices by avoiding customs duties. However, critics, including both past and current U.S. administrations, argued the rule disadvantaged American businesses and facilitated smuggling of illegal goods, such as synthetic opioids like fentanyl.
In response to these concerns, Temu stated it has been actively recruiting U.S.-based sellers to ensure the smooth operation of its platform. “All sales in the U.S. are now handled by locally based sellers, with orders fulfilled from within the country. The move is designed to help local merchants reach more customers and grow their businesses,” the company said. This shift underscores Temu’s effort to comply with the changing regulatory environment as Temu shifts U.S. operations towards a localized sales model.
Changes to the de minimis exemption reflect broader efforts to regulate low-value imports. Earlier this year, former U.S. President Donald Trump briefly shut down the loophole, though immediate interruptions to customs and postal services led to its temporary reinstatement. The latest executive order highlights concerns over deceptive shipping practices using this exemption to smuggle contraband, particularly drugs.
Under the new regulations, packages from mainland China and Hong Kong now face a 120% tax rate or a flat fee, starting at $100 and increasing to $200 by June. For Chinese retailers like Temu and Shein, these changes are expected to significantly increase operating costs, adding to the financial pressures caused by evolving global trade policies.
The elimination of the de minimis exemption is also expected to have a ripple effect on online shopping and international trade. According to the American Action Forum, the policy change could result in $8 to $30 billion in additional annual costs for U.S. consumers. Meanwhile, similar reforms are being considered in the UK and EU to address low-value imports.
While U.S. officials argue the changes will strengthen domestic businesses and curb illegal imports, critics warn the reforms may strain customs resources and fail to stop drug smuggling effectively. Authorities note that most synthetic opioids enter the U.S. through the southern border with Mexico, rather than via e-commerce shipments.
As Temu pivots its business strategy, its decision to localize sales highlights a broader industry shift in response to evolving trade policies. The transition as Temu shifts U.S. operations underscores rising challenges for cross-border e-commerce and its adaptation to a newly regulated market landscape.
