Temu, the Chinese discount shopping giant, has abruptly halted all shipments from China to the United States following the closure of a crucial tariff loophole and intensifying scrutiny over alleged connections to forced labor practices.
At a Glance
- Temu has stopped shipping goods directly from China to the U.S. after President Trump eliminated the de minimis loophole that allowed duty-free shipments under $800
- The company now labels items as “local,” indicating they’re already in U.S. warehouses, typically at higher prices
- Trump’s executive order raised duties on Chinese imports, increasing the ad valorem rate from 90% to 120%
- Both Temu and competitor Shein have faced criticism for potential links to forced labor in their supply chains
- The loophole closure aims to counter trade imbalances and address national security concerns, including the flow of synthetic opioids
Loophole Closure Forces Temu’s Hand
Temu has ceased shipping products directly from China to American customers following President Donald Trump’s executive order ending the “de minimis” treatment for Chinese imports. The order, which took effect on May 2, 2025, eliminated a provision that exempted shipments valued under $800 from duties and tariffs.
This loophole had been a cornerstone of Temu’s business model, allowing the company to offer deeply discounted products by shipping directly from Chinese manufacturers to U.S. consumers without incurring import taxes.
The company’s website now marks most items as “local,” indicating they are already stored in U.S. warehouses—products that typically come with higher price tags. This significant operational shift follows a dramatic increase in de minimis shipments, which reached 1.36 billion in fiscal year 2024, more than doubling from 637 million just four years earlier. The surge in these small-value shipments had created a backdoor channel for Chinese goods to enter the American market untaxed.
Trump’s Tariff Policy Targets Chinese E-commerce Giants
President Trump’s policy changes extend beyond eliminating the de minimis exemption. His administration has increased the ad valorem rate on Chinese imports from 90% to 120% and raised per-item duties, directly targeting companies like Temu and Shein that rely on mobile apps to sell low-cost goods direct from China. These measures aim to address what Trump described as a necessary response to China’s contribution to persistent trade deficits and manufacturing capacity issues.
“In my judgment, this modification is necessary and appropriate to effectively address the threat to U.S. national and economic security posed by the PRC’s [China’s] contribution to the conditions reflected in large and persistent trade deficits, including PRC industrial policies that have produced systemic excess manufacturing capacity in the PRC and suppressed U.S. domestic manufacturing capacity, which conditions are made worse by the PRC’s recent actions.”, wrote President Trump.
The policy changes require carriers to report detailed shipment information to U.S. Customs and Border Protection and ensure appropriate duties are paid. Both Temu and competitor Shein have already announced plans to increase prices in response to these new requirements, potentially disrupting their business models that have significantly impacted American retailers over the past few years.
Human Rights Concerns Cloud Temu’s Operations
Beyond tariff issues, Temu has faced mounting criticism over potential connections to forced labor in Chinese manufacturing. The company’s ultra-low prices have raised questions about labor practices within its supply chain, particularly regarding the treatment of workers in Chinese factories. Representative Mike Gallagher (R-WI) has been particularly vocal about these concerns.
Impact on U.S. Retail and Consumer Markets
The rise of Temu and Shein has significantly disrupted American retail, contributing to the financial struggles of established companies. Traditional retailers have found it increasingly difficult to compete with the ultra-low prices offered by these Chinese platforms. This competitive disadvantage was highlighted in bankruptcy proceedings by American companies that struggled against these duty-free imports.
With Temu halting Chinese shipments and the loophole now closed, consumers will likely see price increases on previously discounted items. Social media influencers who built content around Temu “hauls” have already begun reconsidering their approaches. These policy changes mark a significant shift in the landscape of international e-commerce and may provide some relief to American retailers that have struggled to compete with duty-free Chinese imports.
