Temu Halts Shipments from China
Introduction to Temu’s Decision
Bargain fast-fashion chain Temu has halted all shipments into the US from China.
Currently, the company is only selling products that are stocked in American warehouses.
For US consumers, all products not currently sitting in warehouses are listed as ‘out of stock.’
Meanwhile, the company has confirmed it is actively recruiting US merchants to supply its products.
Background on Temu’s Popularity
The turn away from Chinese production is a shocking turn of events for a company that infiltrated the US market with ultra-cheap products and became increasingly popular for bargain-hunting Americans.
Customers flocked to the app for cheap prices on everyday goods: shirts sold for $2, shoes only cost $5, and even some home appliances listed for less than $100.
To many, the online store acted as an inflation buster.
But to American businesses, the company presented an existential threat.
Temu’s CEO, Colin Huang, became one of the world’s richest people after his company’s massive success
Tariff Exemption and Its Impact
Several brands listed Temu and its competitor Shein as contributors during the bankruptcy declarations.
Temu’s decision comes after the United States ended a tariff exemption for goods shipped from China worth less than $800, known as the de minimis rule.
President Trump signed an executive order that nixed the loophole in April. Border agents started charging companies for the tariff on Friday at 12:01am EDT.
Now, nearly all global products shipping into the US are subject to levies created by the administration.
The import taxes range from 10 percent to 145 percent, with China getting slapped at the largest rate.
Those taxes likely made Shein and Temu’s previous Chinese business practices untenable, experts told DailyMail.com.
‘With tariffs and the ending of de minimis, the cost of doing business in the US is rising for Shein and Temu,’ Neil Saunders, the managing director of retail at GlobalData, told DailyMail.com.
‘Given their business models are low margin they have little choice but to increase prices for consumers.’
Shoppers rushed to Temu and Shein as an inflation busting app
The apps quickly became some of the largest e-commerce sellers in the US
Shein and Temu previously relied on robust production facilities in China – Temu has since adjusted its app’s product availability
Price Increases and Business Model
Temu and Shein both warned customers that their products were set to get more expensive by April 25.
At first, shoppers noticed the prices had started to tick up a few dollars. $2 shirts became $4, and $5 shoes became $9.50.
While the initial price increases showed that the companies had to respond to Trump’s tariffs, business experts told DailyMail.com that the new tariff rules didn’t sap either company’s core strength: lower pricing.
‘Many of their direct competitors source products from China (and other markets that may face significant, persistent tariffs),’ Steve Dennis, the president of SageBerry Consulting, said in an email.
‘Temu and Shein’s advantage stems from both low cost labor and the strength of their innovative business model (little or no markdown merchandise, ability to deeply understand consumer trends and respond, very short time to market).’
Conclusion
In conclusion, Temu’s decision to halt shipments from China is a significant turn of events for the company and its customers. The impact of the tariff exemption and the company’s response to it will be closely watched by consumers and businesses alike.
FAQs
Q: Why did Temu halt shipments from China?
A: Temu halted shipments from China due to the ending of the tariff exemption for goods shipped from China worth less than $800.
Q: What does this mean for US consumers?
A: US consumers will only be able to purchase products that are stocked in American warehouses, and all other products will be listed as ‘out of stock.’
Q: How will this affect prices?
A: Prices are expected to increase due to the new tariff rules, but the company’s business model is still focused on providing low-cost products to consumers.
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