Temu Shifts to U.S. Warehouses as De Minimis Tariff Loophole Closes Under New Trade Rules

Chinese e-commerce platform Temu has shifted its U.S. logistics strategy to domestic fulfillment, halting direct shipments from China. This change follows the closure of the 'de minimis' tariff exemption, which allowed duty-free imports under $800. The exemption ended under an executive order by President Trump, imposing tariffs up to 145% on low-value imports. Temu now relies on U.S.-based warehouses and local sellers, marking a significant shift from its original model. The move aims to comply with new trade regulations and maintain product availability despite increased costs.

A Strategic Pivot in Response to Trade Policy

Temu, owned by China-based PDD Holdings, built its U.S. presence by offering ultra-low-cost goods shipped directly from Chinese manufacturers. This model was made viable by the de minimis exemption, a provision in U.S. customs law that allowed individual packages valued under $800 to bypass tariffs and customs inspections. However, as of May 2, 2025, that loophole has been officially closed under an executive order signed by President Trump in April.

The new policy imposes tariffs of up to 145% on low-value imports from China and Hong Kong, effectively dismantling the cost advantage that Temu and similar platforms like Shein had leveraged to dominate the U.S. discount retail market. The White House cited national security concerns and the need to curb illicit drug shipments as key motivations for ending the exemption.

Operational Overhaul: From Cross-Border to Domestic Fulfillment

In anticipation of the policy shift, Temu began restructuring its logistics network over the past year. The company adopted a "half-custody" model, encouraging Chinese suppliers to ship goods in bulk to U.S. warehouses. Now, with the de minimis rule officially terminated, Temu has fully transitioned to a "local fulfillment model."

“All sales in the U.S. are now handled by locally based sellers, with orders fulfilled from within the country,” a Temu spokesperson confirmed. The company has also been actively recruiting U.S. sellers and importers to join its platform, aiming to maintain product availability and pricing stability despite the regulatory upheaval.

Temu’s U.S. website and app now exclusively display products stored in domestic warehouses. Items previously shipped directly from China are marked as out of stock. The company has also added labels such as “Local” and “No import charges” to reassure customers that their purchases will not incur additional fees at delivery.

Inventory Management and Supply Chain Adjustments

Temu’s shift to domestic warehousing required a rapid buildup of inventory in the U.S. over the past several months. According to reports, the company encouraged Chinese factories to send bulk shipments ahead of the tariff deadline, stockpiling goods in American distribution centers. However, as these inventories deplete, replenishing them under the new tariff regime will be significantly more expensive.

Previously, Temu operated with minimal control over the supply chain, acting primarily as a digital marketplace while Chinese manufacturers handled fulfillment. The new model demands greater logistical coordination and investment in warehousing infrastructure, as well as closer partnerships with U.S.-based sellers and importers.

Official Statements and Platform Messaging

Temu has emphasized that the operational changes are intended to ensure compliance with U.S. trade laws and to support faster delivery times. “The move is designed to help local merchants reach more customers and grow their businesses,” the company stated.

Despite the logistical overhaul, Temu claims that pricing for U.S. consumers remains unchanged. However, analysts and industry observers note that the loss of the de minimis advantage will likely erode the platform’s ability to offer ultra-low prices in the long term.

Broader Trade Policy Context

The closure of the de minimis loophole is part of a broader effort by the Trump administration to tighten trade rules on Chinese imports. The executive order ending the exemption cited concerns over the flow of synthetic opioids and the impact of duty-free imports on American manufacturers and retailers.

According to U.S. Customs and Border Protection (CBP), more than 4 million de minimis shipments entered the country daily prior to the policy change. Critics of the exemption argued that the volume of low-value packages overwhelmed customs enforcement and facilitated the entry of illicit goods.

The new rules require all imports, regardless of value, to undergo formal customs entry procedures and be subject to applicable tariffs. This has introduced significant administrative burdens for logistics providers and e-commerce platforms alike.

Industry-Wide Implications

Temu is not alone in facing the consequences of the policy shift. Rival platform Shein has also raised prices on U.S. listings and added tariff-related disclosures at checkout. Amazon, which operates a competing discount platform called Amazon Haul, had considered displaying tariff costs on product pages but ultimately abandoned the plan.

The end of the de minimis exemption marks a turning point for Chinese e-commerce platforms operating in the U.S. market. While Temu has taken steps to adapt by localizing its supply chain, the long-term sustainability of its low-cost model remains uncertain under the new regulatory landscape.

Temu Shifts to U.S. Warehouses as De Minimis Tariff Loophole Closes Under New Trade Rules

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