Temu Adjusts Business Model in the U.S. Amid Tariff Changes and Policy Shifts

Temu, the shopping platform owned by Chinese e-commerce giant PDD Holdings, has adjusted its business model in the U.S. in response to retaliatory tariffs imposed by the U.S. government and the end of the “de minimis” duty exemption policy. The platform, which has seen rapid growth in the U.S. market, connects customers directly to products made in China and markets itself as a bargain destination, promoting the concept of “shopping like a billionaire.”

In a move to adapt to these changes, Temu announced that it has transitioned to a “local fulfilment model” for its U.S. operations. Under this new arrangement, all sales to American customers are now managed by U.S.-based sellers, with orders being fulfilled within the country. Despite this operational shift, Temu assured that the pricing for U.S. consumers would remain unchanged. The company is actively recruiting U.S. sellers to join the platform, and it is speculated that Temu may eventually phase out China-based merchants. This could require them to set up operations in the U.S. or cease selling directly to American shoppers.

This shift in strategy comes amid significant challenges for Temu and other Chinese-backed e-commerce platforms like Shein. These companies are directly impacted by the U.S. government’s tariff changes, especially the end of the “de minimis” policy. Under this policy, small-value packages from China and Hong Kong were previously exempt from import duties. However, starting on Friday, any parcels valued under $800 from China will be subject to an import tax of 120 percent of the product’s value, or a minimum fee of $100 per item.

Before implementing this new business model, Temu had been adding “import charges” of around 145 percent to products, effectively passing the increased tariff costs onto U.S. consumers. In response to these financial pressures, Temu has also significantly reduced its advertising spending in the U.S. to manage costs while continuing to expand its footprint.

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