Temu shifts to US sellers to bypass import tariffs

Temu, an online retailer owned by PDD Holdings Inc., is shifting to a “local fulfillment” model.

The company will now sell merchandise exclusively from US-based merchants to avoid elevated tariffs on Chinese imports and keep prices stable for American consumers.

This move comes after previously applying a surcharge to offset higher tariffs and as inventory in the US begins to decline.

The company is actively recruiting local sellers to support this new strategy. The change follows challenges faced by Shein and Alibaba after the end of the de minimis tariff exemption.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ E-commerce platforms facing unprecedented tariff pressures

The recent tariff changes represent a significant shift in Chinese e-commerce export strategy, with data showing a 65% drop in shipments to the US in Q1 2025 alone 1.

This decline follows Trump’s implementation of 145% tariffs on Chinese imports combined with the elimination of the de minimis loophole that previously allowed small packages under $800 to enter duty-free 1.

The impact has been immediate, with Temu competitors like Shein warning of price increases on certain products and even established retailers like Amazon seeing over 1,000 products increase by an average of 30% 2.

These pressures have created a pivotal moment for Chinese e-commerce platforms, with Temu’s local fulfillment strategy representing a notable business model pivot in response to trade restrictions.

2️⃣ The complex economics behind Temu’s “prices unchanged” promise

Temu’s pledge to maintain pricing while shifting to US merchants raises significant economic questions about their business model and long-term sustainability.

The platform previously leveraged China’s massive manufacturing ecosystem that produces goods at prices often 30-70% lower than US equivalents, which allowed Temu to offer lower prices than traditional retailers 3.

With Chinese e-commerce exports to the US plummeting 65% while shipments to the EU have increased 28%, Temu’s strategic shift demonstrates how tariffs can redirect global trade flows 1.

Prior to this shift, Temu had been experimenting with frameworks where Chinese factories shipped goods in bulk to American warehouses, suggesting this pivot is part of an existing strategic evolution 4.