Temu and other Chinese cross-border retailers are overhauling their business models as exemptions to US import duties are set to end on Friday, with the changes leaving individual sellers on these platforms bearing more of the risks of doing business in America.
Temu, the bargain-based platform of PDD Holdings, previously shipped most of its products for overseas markets from China. But on Friday, it said it has recently transitioned its US operations to a local fulfillment model, meaning that all sales to US customers are now handled by sellers based in the country and orders fulfilled from within its borders.
“Temu has been actively recruiting US sellers to join the platform. The move is designed to help local merchants reach more customers and grow their businesses,” the company said in a statement to Nikkei Asia.
The change comes in response to the end of the de minimis exemption, a trade provision that exempts packages valued under USD 800 from import duties. This exemption has been a pillar of the ultra-low-cost business model used by many Chinese platforms to ship directly to US consumers under so-called full consignment and half consignment models.
Under the full consignment model, Chinese sellers only need to ship the products to domestic warehouses of the online platform, which then takes care of the rest, from price-setting and customs clearance to customer service. Under the half-consignment model, sellers are responsible for product listings and logistics, which may include shipping products from China to overseas warehouses for faster fulfillment, while the platform handles promotion and other operational support. Some platforms like AliExpress allow sellers to set their own price, while others like Temu set the prices themselves.
One executive from a leading Chinese e-commerce platform told Nikkei Asia that the trend in the industry is to gradually phase out the full-consignment model and have sellers take responsibility for their own shipments. Otherwise, the executive said, the burden on the platforms will be too high.
Eventually, the person added, local third-party sellers and Chinese sellers who take care of the shipment themselves will become mainstream on the platforms.
Temu, Shein, AliExpress and TikTok Shop have all begun raising prices for US customers. For products stored in warehouses outside of the US, which are no longer available, Temu had a tariff surcharge as high as 150% of the product’s price tag, according to Nikkei‘s observations.
As of May 2, Shein continued to list such items, adding tariffs charges to the total cost at time of checkout, but without providing a detailed breakdown. According to people familiar with the matter, the fast fashion giant is attempting to absorb a portion of the tariffs itself in an effort to remain price-competitive, following a significant decline in profit last year. Shein adds a tariff charge of around 50% to the price of some of the products, Nikkei found.
Shein and AliExpress did not immediately respond to a request for comment.
US President Donald Trump ended the de minimis exemption without warning in early February, only to pause the order for three months after it caused chaos for customs inspectors. But starting May 2, small parcels shipped from mainland China and Hong Kong will face tariffs as high as 120% or a flat fee of USD 100–200 per package. The tariffs will be further increased on June 1. The industry is also bracing for more disruptions at ports, as shippers will have to report each package to US customs, which could require further processing to apply the tariffs.
One Chinese freight forwarder told Nikkei they expect the inspection rate at US ports to be at around 75% after May 2, and now they require payment of the product price plus an additional 150% before accepting and shipping goods. In the past, freight forwarders would also handle customs clearance, but now they do not dare to.
Chinese e-commerce platforms were not caught off guard by this latest trade disruption. Discussions about canceling or reforming the de minimis exemption in the US began gaining traction in the early 2020s, with significant attention emerging around 2024. As a result, Shein, Temu, and AliExpress had already started to recruit local sellers as early as 2023 to counter potential risks, but progress has been slow.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.