Temu Scraps China Shipments as Trump Kills De Minimis Rule, Igniting E-Commerce Shakeup and Price Hikes

Chinese discount retailer Temu has dramatically overhauled its U.S. operations following the formal repeal of the de minimis rule and the introduction of a 145% tariff on Chinese goods by President Donald Trump, a policy shift that is already reshaping the landscape of online shopping in America and pushing prices higher.

As the new rules took effect early Friday, Temu stripped its app and website of nearly all China-shipped products, which once accounted for the bulk of its ultra-low-cost offerings. Instead, the platform now displays only items shipped from U.S.-based warehouses, while Chinese-sourced goods are marked “out of stock.”

Temu, a subsidiary of Chinese e-commerce giant PDD Holdings, previously relied on the de minimis trade provision, a 2016-era rule that allowed goods worth $800 or less to enter the U.S. duty-free, to ship millions of low-cost items directly from Chinese factories to American doorsteps. It enabled prices like $3 earbuds, $1.50 garlic presses, and $5 sneakers, often cheaper than what domestic sellers could offer.

But with the end of the loophole, coupled with Trump’s newly imposed 145% tariff on Chinese imports, Temu has been forced to pivot. The retailer is not only raising prices and cutting back on aggressive advertising, but it has now completely transitioned to a model reliant on domestic fulfillment and U.S.-based sellers.

“Temu has been actively recruiting U.S. sellers to join the platform,” a company spokesperson told CNBC, adding that all sales are now fulfilled “from within the country.” The company insists prices remain “unchanged,” but that claim has been undercut by soaring backend costs and widespread reports of elevated product pricing following the shift.

Before the move, American shoppers trying to purchase China-based products from Temu were presented with import fees ranging from 130% to 150%, sometimes higher than the product itself. These charges, tied directly to Trump’s tariff, effectively doubled or tripled the final cost of many items, rendering Temu’s trademark affordability unsustainable under the new regime.

To mitigate the damage, Temu now highlights U.S.-based goods with labels such as “no import charges” and “no extra charges upon delivery”, hoping to reassure buyers who may have been turned off by surprise fees.

The broader impact is already reverberating across e-commerce platforms.

Amazon, the U.S. e-commerce giant and a competitor to Temu through its Amazon Haul section, announced last week that prices would be going up due to Trump’s tariffs. Haul, which focused on shipping inexpensive Chinese goods (typically under $20) directly to American consumers, was built around the same de minimis framework that Temu used to thrive.

Amazon initially began displaying the tariff-related costs for Haul products at checkout to improve transparency. But according to sources familiar with the matter, Trump intervened directly, reportedly objecting to Amazon “weaponizing the tariffs” against his administration. The company was forced to remove the price breakdown and reverse the feature after a behind-the-scenes clash with the White House.

The resulting confusion and policy reversals have frustrated sellers and customers. Multiple third-party merchants on Amazon said they’ve already seen reduced margins and increased returns due to unexpected fees and pricing shifts. Others are now scrambling to find domestic partners or warehouse space in the U.S. to replicate Temu’s pivot and stay compliant.

Shein, another China-rooted online retailer known for dirt-cheap clothing, has also moved to include tariff costs in its pricing structure. The app now shows a banner at checkout that reads, “Tariffs are included in the price you pay. You’ll never have to pay extra at delivery.”

But the removal of the de minimis rule, which some lawmakers have called “a customs blindspot”, is more than a tariff story. It is expected to significantly increase the cost of goods nationwide, particularly for categories like electronics, clothing, household accessories, and toys — most of which come from China. This comes at a time when inflation remains a top concern for many American households.

Retail analysts say that price hikes will be unavoidable. Chinese suppliers either have to absorb the tariffs (which many can’t), or shift fulfillment to the U.S. (which adds overhead and warehousing costs). That cost increase, inevitably, will be passed down to consumers.

Temu’s rapid shift was months in the making. The company had begun building out U.S. warehousing and logistics infrastructure in 2023, anticipating that Trump or any future administration could clamp down on de minimis. But experts say even with that head start, the company faces a long road toward replicating the scale and efficiency of its China-to-doorstep model within U.S. borders.

Meanwhile, Trump’s second-term trade policy continues to raise alarms in corporate circles, where firms have already warned of broader supply chain disruptions, especially for small businesses that rely on Chinese manufacturing. Trade groups have cautioned that the tariffs will hurt U.S. competitiveness.

The move to kill de minimis was rooted in bipartisan concerns about national security, illicit imports, and fair competition. Lawmakers and customs officials had argued that millions of low-value packages entering the U.S. each day were evading inspection, making it easier for fentanyl, counterfeit goods, and undeclared electronics to slip through the cracks.

While President Biden had also floated the idea of restricting de minimis, it was Trump who executed the repeal, branding it as part of his effort to put “America First” and clamp down on “unfair trade practices” by China.

With one of its key advantages erased, Temu’s future in the U.S. is now under threat. While the company has taken early steps to adapt, it is not clear whether a platform born on the back of ultra-cheap, China-shipped goods can remain viable under present circumstances – without de minimis.