How US Tariffs Are Reshaping Temu's Pricing and Fulfillment Strategy

Since its US launch in 2022, Temu has attracted customers with bargain prices on a wide range of products. However, recent trade policy changes under the Trump administration have disrupted this dynamic. The revocation of the "de minimis" exemption, which previously allowed goods valued under $800 to enter the US duty-free from China and Hong Kong, has led to significant import charges and price increases on Temu's offerings.

Following these changes, Temu raised prices and added import charges that sometimes exceeded the cost of the products themselves. This pricing shift caused customer dissatisfaction, a sharp decline in site traffic, and a considerable drop in sales volume.

To counteract these challenges, Temu has ceased shipping products directly from China to US customers. Instead, it now relies on locally based sellers within the US to fulfill orders domestically. This strategic pivot aims to keep prices low by avoiding import tariffs and maintaining Temu's competitive pricing model.

A Temu representative confirmed that pricing for US consumers remains stable during this transition and that the company is actively recruiting US sellers to expand its local fulfillment network. This approach currently shields Temu’s products from the new US tariff rules since goods are no longer imported from China.

However, this model's sustainability depends on the availability of inventory in US warehouses. If stock runs out and Temu resumes shipping from China, current tariffs and the absence of the de minimis exemption could lead to significant price hikes once again.

The experience of Shein, a similar e-commerce platform headquartered in Singapore, offers a glimpse into potential future pricing trends. Shein has already increased prices substantially in categories such as beauty and health products by 51%, and home and kitchen goods by 30%. A survey of women’s clothing items showed an average price increase of 43%. Some individual products saw dramatic hikes, like a kitchen towel rising 377% in price and a meat shredder increasing by 219%.

These price adjustments reflect a broader trend of rising costs for US consumers on imported goods due to tariff policies. The elimination of the de minimis exemption and increased tariffs have disrupted the fast-fashion and bargain retail business models, forcing companies to adapt their supply chains and pricing strategies.

For shoppers, this means weighing the timing of purchases carefully. Industry experts suggest monitoring tariff developments closely, as prices may fluctuate depending on policy changes and how retailers adjust their fulfillment strategies.