Temu, a popular China-based e-tailer, halted shipments to the United States after President Donald Trump ended a trade loophole exempting low-value goods from tariffs.
Temu has historically benefited from a provision called the “de minimis rule” that exempted goods worth $800 or less from tariffs. The company’s operating model allows it to work closely with Chinese suppliers to ship ultra-low-priced apparel, electronics, and other items directly from China to U.S. consumers.
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However, in April, Trump signed an executive order ending the exemption effective May 2. On Friday, Temu announced it would no longer ship products directly from Chinese factories to U.S. consumers. Instead, it will rely on domestic local sellers in the U.S. to distribute its products.
The U.S. version of Temu’s website now only displays products warehoused domestically, identified as “local,” while goods shipped from China are listed as out of stock.
In a statement to the Washington Examiner, Temu confirmed it is “transitioning to a local fulfillment model” and “actively recruiting U.S. sellers to join the platform.”
“All sales in the U.S. are now handled by locally based sellers, with orders fulfilled from within the country,” the company said. “The move is designed to help local merchants reach more customers … This shift is part of Temu’s ongoing adjustments to improve service levels.”
The de minimis rule exemption took effect in 2016, although similar loopholes have existed for nearly a century since Congress approved the policy in the 1930s.
Chinese companies such as Temu and Shein have historically taken advantage of the exemption to sell low-priced goods to U.S. consumers.
Critics say there’s evidence that the online marketplaces are guilty of human rights violations, using forced labor to churn out fast fashion goods. They worry Temu is conducting operations in the Xinjiang region of China that could be taking advantage of the Uyghur minority, an oppressed group many countries recognize as the target of genocide. Critics have also expressed concern about dangerous toxins in Temu’s products, including elevated levels of lead, perfluoroalkyl and polyfluoroalkyl substances, and phthalates.
The Trump administration has focused primarily on the economic angle when dealing with companies such as Temu. The White House believes that cheap goods and low prices are not worth outsourcing jobs and companies to foreign countries.
Trump said last month that the import duty exemption for parcels worth $800 or less amounted to “a big scam going on against our country, against really small businesses.”
His words come after Customs and Border Protection said it processed more than 1.3 billion de minimis shipments in 2024, up from over 1 billion shipments the previous year.
Now that the trade exemption has expired, Temu and Shein will be among the China-based companies subject to Trump’s steep tariffs against Beijing. The president has placed duties of up to 145% on the country to push it to the negotiating table and draw up a new trade deal.
The U.S. is in talks with China to negotiate a deal the president hopes will correct trade practices he believes disadvantage U.S. workers and businesses.
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“I think that over time we will see that the Chinese tariffs are unsustainable for China,” Treasury Secretary Scott Bessent said last week. “Remember that we are the deficit country. They sell almost five times more goods to us than we sell to them, so the onus will be on them to take off these tariffs.”
While Temu has completely retired products shipped from China to the U.S. to avoid paying duties, Shein has yet to take such action. However, it has already raised its prices by large margins, with its top 100 products in the beauty and health category seeing an average increase of 51%, according to Bloomberg.