Temu has officially stopped shipping products directly from China to customers in the United States. The e-commerce platform announced that it will now rely on local U.S.-based sellers to handle all transactions. This decision comes in response to a change in U.S. import regulations that previously allowed duty-free entry for goods under $800.
The platform’s new “local fulfillment model” aims to keep operations compliant while supporting domestic businesses. Temu stated that it had already been onboarding U.S. sellers in recent months to prepare for this shift.
The De Minimis Loophole: A Boon for Cross-Border E-Commerce
Until recently, Temu and other global retailers, such as Shein, used a legal exemption known as “de minimis.” This U.S. trade rule allowed foreign sellers to ship goods valued under $800 into the country without paying import duties or taxes.
According to U.S. Customs and Border Protection (CBP), over 90% of all incoming packages in 2023 qualified for this exemption. The rule was originally designed to simplify customs and speed up retail logistics, especially for low-value shipments.
U.S. Leaders Slam Loophole for Enabling Illegal Trade
However, political leaders from both parties argued the rule had been misused. Former President Donald Trump and President Joe Biden both raised concerns. They claimed the loophole gave unfair advantages to Chinese companies and weakened American businesses.
More alarmingly, critics pointed out that some bad actors had used this route to smuggle illegal goods, especially synthetic opioids like fentanyl. Trump’s administration issued executive orders to tighten enforcement and labeled some practices by Chinese shippers as deceptive.
Shift in Strategy Amid Rising Costs
Shein and Temu recently reported rising costs due to new import tariffs and global trade policy changes. Both companies said they would update their pricing models starting April 25. While Shein has yet to issue a public statement, Temu emphasized that working with U.S. sellers will help broaden its customer base while keeping it legally compliant.
The two retailers have become popular in the U.S. thanks to flashy ads and very low prices. Much of that affordability came from avoiding import duties using the de minimis exemption—now a thing of the past.
Global Ripple Effect: UK and EU Follow U.S. Steps
This isn’t just a U.S. story. Other major markets are also reviewing their rules. The United Kingdom is considering removing tax exemptions for goods under £135. UK Chancellor Rachel Reeves said these cheap imports hurt local shops.
Meanwhile, the European Union plans to scrap exemptions for packages worth less than €150. If passed, these policies could cause prices to rise for online shoppers across the globe, not just in the U.S.
Border Security vs. Retail Oversight
Earlier this year, the U.S. Postal Service temporarily stopped accepting packages from China and Hong Kong during the exemption’s review. Though these parcels were subject to customs checks, experts note that most synthetic drugs still enter through the southern border, not the mail.
Ending the exemption may not reduce drug trafficking as expected. Instead, it could strain U.S. border agents, who now have more parcels to inspect. The National Foreign Trade Council warned that, without more personnel, this shift could pull agents away from more critical tasks.
Consumers Face Higher Costs on Imports
The U.S. government is also adding new taxes on small shipments. Products from China and Hong Kong that used to enter duty-free now face a 120% tariff or a flat surcharge. The fee, which started at $100 in May, is set to increase to $200 in June.
Experts say this will likely raise prices on thousands of items, from electronics to home goods. The American Action Forum estimated the end of the de minimis rule could cost U.S. consumers as much as $30 billion per year.
The Future of Cross-Border Shopping
As governments crack down on import loopholes, platforms like Temu are racing to adapt. The shift to a local fulfillment model shows how e-commerce giants are reshaping strategies to stay afloat. For now, Temu’s U.S. customers may see slower delivery times and higher prices—but also more goods coming from local sellers.
The long-term effects remain to be seen, but it’s clear the days of tax-free global shipping are ending.