The United States Removes Duty-Free Privileges for Low-Value Goods from China and Hong Kong, Tariffs Rise to 145%: Temu and Shein Revise Their Business Strategies in Response

On May 2, 2025, the United States ended the duty-free exemption for small parcels under $800 from China and Hong Kong, resulting in tariffs that could reach as high as 145%. This policy has a significant impact on global e-commerce, especially affecting companies like Temu and Shein that rely heavily on the Chinese supply chain. Temu is shifting its focus towards local warehousing and sourcing, while Shein is adjusting its pricing strategy. Several retailers have suspended sales to the U.S., highlighting the challenges the market faces in adapting to the new tariff policy.

Sudden Change in Tariff Policy Shocks Global Retail Chain

According to an executive order signed by U.S. President Trump in April 2025, starting May 2, goods from China and Hong Kong that previously enjoyed the "de minimis exemption" will no longer be exempt from tariffs. This exemption originally allowed packages valued at no more than $800 to be exempt from tariffs, a policy that Chinese e-commerce platforms have widely utilized. After the new policy is implemented, goods from China and Hong Kong sent via courier companies like UPS, DHL, and FedEx will face tariffs as high as 145%, while those sent through the United States Postal Service (USPS) will incur a 120% tax rate or a fixed fee of $100 per item, which will rise to $200 starting June 1.

This policy change has immediately caused a shockwave through the global supply chain. According to data from the U.S. Customs and Border Protection (CBP), in 2023, the U.S. received packages from China valued at less than $800 totaling $66 billion, indicating a high dependency on this policy by Chinese and Hong Kong e-commerce.

Temu Shifts to Local Warehousing and Supply Chain

Facing tariff pressure, Temu, a subsidiary of Pinduoduo, quickly adjusted its operational strategy. Starting May 2, Temu has completely stopped shipping directly from China to U.S. consumers, labeling all China-sourced products on the platform as "out of stock." Currently, Temu only displays products shipped from U.S. local warehouses and emphasizes that all orders are supplied and fulfilled by sellers within the U.S.

A Temu spokesperson stated that the platform is actively recruiting U.S. local merchants to join and is establishing a local logistics system to maintain stable product prices. The Temu website also clearly indicates that "local" products will not incur import tariffs, thereby alleviating consumer concerns. Previously, Temu attempted to pass on import costs ranging from 130% to 150% to consumers, but abandoned this strategy as the costs often exceeded the product prices themselves.

Shein Adjusts Pricing Strategy, Some Products See Price Increases Over Threefold

Another affected Chinese e-commerce giant, Shein, chose to respond to the new tariffs through price adjustments. Shein announced on its U.S. website and social media that "some product prices may vary, but most products remain affordable." According to tracking platform Geekbi, some Shein products have seen price increases ranging from 40% to 300%, such as a kitchen cleaning cloth originally priced at $1.28, now selling for $6.10.

Unlike Temu, Shein still retains some products shipped directly from China but does not list tariff fees separately on its website. This makes it difficult for consumers to clearly understand the final price breakdown at checkout. Shein has also significantly reduced its digital advertising in the U.S. and adjusted its marketing strategy to address potential sales declines.

Several Retailers Suspend Sales to the U.S.

In addition to Chinese e-commerce platforms, other international retailers have also been affected. British beauty brand Space NK announced on April 30 that to avoid additional costs on customer orders, it has suspended processing e-commerce orders and shipments to the U.S. Canadian lingerie brand Understance also stated on Instagram that it will suspend shipments to the U.S. due to tariff issues, with plans to resume once the policy becomes clear.

British clothing brand Oh Polly chose to increase prices in the U.S. market to cope with tariff pressure. Company General Manager Mike Branney noted that product prices in the U.S. market are already 20% higher than in other markets and may increase further in the future.

Market Restructuring Amid Tariff Pressure

According to Cindy Allen, CEO of global trade consultancy Trade Force Multiplier, "The skyrocketing tariffs from zero to 145% are unbearable for both businesses and customers." She noted that many small and medium-sized enterprises are choosing to exit the U.S. market, with only a few attempting to adjust their operational models to continue selling.

The response strategies of Temu and Shein also reflect the high reliance of Chinese e-commerce platforms on the de minimis exemption policy in the U.S. market. Temu is currently actively expanding into European, Latin American, and Southeast Asian markets, recruiting local sellers in Germany, France, the UK, and Japan to establish logistics and supply chain systems in emerging markets.

The United States Removes Duty-Free Privileges for Low-Value Goods from China and Hong Kong, Tariffs Rise to 145%: Temu and Shein Revise Their Business Strategies in Response

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