How is Trump helping Temu and Shein compete with domestic companies like Amazon and eBay?!
Chinese online retailer Temu has displayed more products on its app that can be shipped from warehouses in the US following President Donald Trump's decision to revoke a popular tax loophole.
The nearly century-old exemption, known as de minimis, has been used by many e-commerce companies to ship goods worth less than $800 to the U.S. without duty . Trump on Saturday suspended the exemption as part of new tariffs that include an additional 10% tax on Chinese goods.
De minimis has helped fuel the explosive growth of Temu and Shein in the U.S. by allowing companies to bypass taxes on low-value shipments and maintain their low prices on everything from shoes and clothing to furniture and electronics.
With the tariff exemption gone, Temu has significantly increased its promotion of sellers who have inventory in U.S. warehouses, rather than items that ship directly from China. A scan of listings in Temu’s “Lightning deals” section shows that it is almost entirely dominated by products with a green “local” badge.
By promoting local inventory, Temu's products not only arrive on shoppers' doorsteps faster, but the company also reduces its reliance on sellers who ship directly from China. Although the products are stored in U.S. warehouses, many local listings state that the items are sold by businesses based in China.
Temu’s promotion of U.S.-based products puts it in more direct competition with Amazon, eBay and Walmart, which have also signed up sellers in China to ship overseas goods to their warehouses . Amazon last year saw Temu and Shein’s dramatic growth in the U.S. when it launched its own budget store, called Haul.
Temu, which is owned by Chinese online retailer PDD Holdings, began introducing sellers with inventory in U.S. warehouses in March. By July, roughly 20% of Temu’s U.S. sales came from these sellers, not China-based merchants, 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, stricter customs requirements. They were thrown into further chaos Tuesday night when the U.S. Postal Service unexpectedly 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 China's new tariffs to ensure minimal disruption to package delivery."
The uncertainty has created volatility for PDD's share 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 has given an unfair advantage to Chinese e-commerce companies and created a flood of packages that are "subject to minimal documentation and inspection," raising concerns about counterfeit and unsafe goods.
Others have advocated for the de minimis exemption to remain in place, saying that eliminating it would burden customs officials and lead to higher government costs. CBP has said it processed more than 1.3 billion de minimis shipments in 2024.
A 2023 report by 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 to the US.
Shein has also been reaching out to U.S. buyers and sellers. The company opened distribution centers in states including Illinois and California in 2022, and a supply chain center in Seattle last year. The company said the Seattle center would allow it to “localize and support faster delivery times for U.S. consumers.”
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