Why Buying from Temu Is About to Get More Expensive
Credit: Jesse Hollington / iDrop News
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Many have wondered how Temu stays in business. Not only does the online discount retailer manage to offer some shockingly low prices on everyday goods, but it’s also been known to spend ridiculous amounts of money on advertising, even going so far as to run Super Bowl ads.
Although there are many tricks to Temu’s success, including the fact that it’s believed to have operated at a loss to increase market penetration, one of the most significant loopholes that allows the e-tailer to reach American consumers with affordable Chinese-made products may be about to vanish as a result of the Trump administration’s trade war.
In an interesting twist, Temu has managed to escape escalating tariffs being levied on Chinese imports thanks to a secret weapon: its ability to take advantage of something known as the “De Minimis Value.” This is a dollar threshold below which express shipments sent directly to individuals are considered too small for US Customs to bother charging duties on.
Since the De Minimis Value is based on the dollar amount of an entire shipment, not the individual products it contains, most US-based companies like Apple and Amazon don’t qualify for this exemption because they ship massive quantities of products into US-based warehouses. Still, if you’ve ever ordered a product from Amazon that ships directly from China, this is the reason why you don’t have a delivery driver showing up at your door with a credit card machine to collect additional duties that would be owing.
However, with Temu, its entire business model is based on shipping low-priced products directly to customers. Since nearly everything you can buy from Temu comes in at under $800, they fly right through customers, tariff-free. Even if you order a ton of stuff from Temu and it exceeds that threshold, the company is clever enough to juggle the shipments to keep everything under the $800 mark.
This allows the company (and its customers) to avoid paying import duties entirely. However, that free ride is coming to an end for all companies worldwide, which isn’t all that surprising in a US administration that wants to collect as many tariffs as possible. In April, The Wall Street Journal called it a $67 Billion Tariff Dodge (Apple News+ link), and it’s not just Temu that’s taking advantage of it — they’re just the most significant player in the game.
This week, President Donald Trump signed an executive order suspending the de minimis exemption for all countries. “Effective August 29, imported goods sent through means other than the international postal network that are valued at or under $800 and that would otherwise qualify for the de minimis exemption will be subject to all applicable duties,” the White House fact sheet reads.
Goods shipped through the postal network will still be assessed duties, but they’ll be phased in using a slightly different system for the first six months, with flat-rate duties of $80–$200 per item based on the country of origin. This is likely to manage the workload for an onboarding period while US Customs officials adjust to the changes, something that’s long been a concern with removing the de minimis exemption.
Technically, Temu and other Chinese companies like Shein were already hit by this change in May when President Donald Trump adjusted the de minimis rules for China during the earlier rounds of Chinese tariffs. However, dealing with this trade loophole isn’t an entirely new idea, as the Biden-Harris White House issued a fact sheet on De Minimis Reform in September, but never had much time to follow through on it.
