Temu Shifts Strategy as U.S. Closes Duty-Free Loophole for Chinese Imports

Hadisur Rahman, JadeTimes Staff

H. Rahman is a Jadetimes news reporter covering Business

---

Image Source: Getty Images

In a significant shift in global e-commerce dynamics, Chinese e-commerce platform Temu has announced it will no longer sell goods imported directly from China to U.S. consumers. Instead, all sales will now be handled by locally based sellers with fulfillment from within the United States. This move follows the closure of the “de minimis” exemption a long-standing trade rule that allowed low-value packages (under $800) to enter the U.S. duty-free. The decision is expected to reshape the pricing, logistics, and competitiveness of cross-border online retail, especially for Chinese marketplaces like Temu and Shein.

Let’s break down what this change means for online shoppers, global trade, and American businesses.

What Was the De Minimis Exemption-And Why Was It Important?

The de minimis exemption dates back to 1938, originally designed to avoid the administrative costs of collecting duties on low-value imports. Over the years, the threshold was raised, and in the 21st century, it allowed any package valued under $800 to be shipped into the U.S. without paying import duties or taxes.

This rule provided a massive advantage to platforms like Temu and Shein, which used it to offer ultra-low-priced goods directly from Chinese factories to American consumers. In fact, over 90% of cargo entering the U.S. fell under this category, according to U.S. Customs and Border Protection (CBP).

Why Was the Loophole Closed?

Both the Trump and Biden administrations raised concerns that the de minimis loophole was being exploited not only to undercut American manufacturers and retailers but also to smuggle illegal goods, including synthetic opioids like fentanyl.

In February, former President Trump issued an executive order suspending the exemption, stating that many Chinese shippers disguised illicit drugs in low-value packages to bypass border controls. Although the suspension was initially paused due to logistical challenges, it was reinstated as part of a broader effort to combat illegal imports and protect domestic industries.

Trump’s administration has since imposed tariffs of up to 145% on Chinese goods, with some categories potentially facing up to 245% in total levies.

Temu’s Response: Going Local in the U.S. Market

In response to the regulatory changes, Temu has adapted its business model. Instead of shipping directly from China, the platform is now relying on U.S.-based sellers and fulfilling orders from domestic warehouses. This move not only aligns with the new trade rules but also allows Temu to support local businesses.

“All sales in the U.S. are now handled by locally based sellers, with orders fulfilled from within the country,” the company stated. “The move is designed to help local merchants reach more customers and grow their businesses.”

Temu has also been actively recruiting American companies to join the platform, signaling a pivot towards a more localized e-commerce ecosystem.

Impact on Shoppers: Rising Prices and Slower Shipping

The end of the de minimis exemption means that packages coming from mainland China and Hong Kong now face steep taxes up to 120%, or a flat fee starting at $100 (set to rise to $200 in June). As a result, U.S. consumers can expect to see noticeable price increases on low-cost goods, which were once a hallmark of platforms like Temu and Shein.

Even before these taxes took effect, analysts from the American Action Forum projected that scrapping the exemption would lead to an additional $8 billion to $30 billion in annual costs, ultimately passed on to consumers through higher prices.

Shipping times may also be affected, as more products are now stored and dispatched domestically rather than air-shipped directly from China.

Global Ripple Effects: UK and EU Set to Follow

The United States is not alone in reevaluating low-value import rules. The UK currently allows packages under £135 to enter tax-free, but a policy review is underway. Chancellor Rachel Reeves criticized the current system, saying it unfairly "undercuts the British High Street and British retailers."

Similarly, the European Union has proposed scrapping its duty-free exemption for packages valued under €150, suggesting a coordinated global move to level the playing field for domestic businesses.

Will This Help U.S. Manufacturing and Border Security?

While the crackdown on duty-free imports is aimed at supporting American manufacturers and improving border enforcement, some experts are skeptical of its effectiveness in curbing illegal drugs. Most synthetic opioids, officials note, still enter the U.S. via the Mexican border.

Critics argue the policy shift may overload customs agents and border inspectors. The National Foreign Trade Council (NFTC) warned that eliminating the de minimis exemption could "shift the CBP's focus away from the border, where a vast majority of illegal substances and products are entering the country."

A New Era for Global E-Commerce

Temu's decision to localize its U.S. operations marks a turning point in global online retail. The closure of the de minimis loophole is not just a regulatory move it represents a broader geopolitical and economic shift aimed at reshaping trade relationships, protecting domestic industries, and tightening border security.

For online shoppers, this means higher prices, fewer direct-from-China deals, and potentially more support for local businesses. For retailers, it’s a chance to re-enter a market once dominated by ultra-cheap imports. As the U.S., UK, and EU realign trade rules, the global e-commerce landscape is set for a major transformation.