The era of ultra-cheap goods shipped directly from China to American doorsteps has come to an abrupt end. Temu, the Chinese e-commerce platform that revolutionized online shopping with rock-bottom prices, officially ceased direct shipments from China to US customers in May 2025. This dramatic shift represents one of the most significant changes in cross-border e-commerce since the platform’s launch in 2022.
The catalyst for this transformation was the Trump administration’s decision to permanently eliminate the de minimis tariff loophole on May 2, 2025. This exemption previously allowed goods valued under $800 to enter the United States without import duties, creating a pathway for millions of small packages to flood American ports duty-free. President Trump characterized this long-standing trade provision as “a big scam going on against our country, against really small businesses.”
For Temu, this regulatory change struck at the heart of its business model. The platform had built its reputation on offering products like $2 gadgets and $10 shoes, with most items strategically priced to exploit the de minimis rule. With the loophole’s closure, these same products now face import charges exceeding 100% in some cases, with tariffs reaching as high as 145% on Chinese goods.
The impact was immediate and decisive. Within hours of the exemption’s expiration, Temu announced it was completely overhauling its US operations. The company now exclusively works with US-based sellers, fulfilling all orders from domestic warehouses to avoid the punitive tariffs that would otherwise make their products prohibitively expensive.
The De Minimis Loophole: How It Worked and Why It Ended
The de minimis exemption originated from a 1938 law designed to simplify customs procedures for low-value imports. Over the decades, this threshold evolved to $800, creating an unintended consequence in the digital age. Chinese e-commerce platforms like Temu and Shein became masters at leveraging this loophole, breaking down larger shipments into smaller packages to avoid duties.
This system enabled thousands of low-value packages to bypass customs scrutiny, saving money and accelerating delivery times. However, critics argued it gave Chinese companies an unfair advantage over American retailers who couldn’t compete with duty-free imports. The loophole also raised security concerns, as it made it easier to smuggle illegal goods, including fentanyl, in small packages.
Temu’s Strategic Response: Pivoting to Local Fulfillment
Faced with tariffs that could more than double product costs, Temu executed a rapid strategic pivot. The company now operates exclusively through a local fulfillment model, partnering with US-based sellers and maintaining inventory in domestic warehouses. This approach allows Temu to avoid import duties entirely while maintaining competitive pricing.
“Temu’s pricing for US consumers remains unchanged as the platform transitions to a local fulfillment model,” the company stated. However, this transition has come with trade-offs. Customers now see fewer product listings, reduced variety, and longer wait times as the platform rebuilds its supply chain from scratch.
Impact on Consumers and E-commerce
The changes have fundamentally altered the online shopping experience for millions of Americans who relied on ultra-cheap Chinese imports. While Temu maintains that pricing remains unchanged, many customers report higher costs and fewer available items. The company is actively recruiting US sellers to expand its domestic inventory, but matching the vast selection previously available from China remains challenging.
This shift extends beyond Temu, affecting other Chinese platforms like Shein and AliExpress. The closure of the de minimis loophole represents a broader realignment of US-China trade relations, with implications for the entire cross-border e-commerce ecosystem.