Temu Ends Direct-from-China Sales to U.S. as Trump Administration Shuts Down Duty-Free Loophole

By: TJVNews.com

In a significant strategic shift tied to U.S. trade policy changes, Chinese e-commerce giant Temu announced it will no longer sell goods directly from China to American consumers. Instead, as reported by the BBC on Friday, the company will now rely on “locally based sellers” to handle all transactions within the United States, fulfilling orders from domestic warehouses and distribution centers.

The change comes in the wake of the Trump administration’s decision to close the “de minimis” duty-free exemption, a trade rule that had allowed companies such as Temu and rival Shein to ship low-value packages into the U.S. without paying import taxes or duties.

Temu’s shift in operations is more than a logistical adjustment—it represents a response to growing bipartisan criticism of the de minimis rule, which U.S. officials now argue has become a loophole exploited by foreign shippers, particularly those from China.

According to the information provided in the BBC report, Temu confirmed the changes in a public statement, noting: “All sales in the U.S. are now handled by locally based sellers, with orders fulfilled from within the country. The move is designed to help local merchants reach more customers and grow their businesses.”

Temu emphasized that it has been actively recruiting U.S.-based firms to join its platform in recent months, a sign that the company had been preparing for this shift even before the formal regulatory clampdown.

The de minimis exemption, originating from a 1938 U.S. trade law, allowed goods valued under $800 to enter the United States without being subject to customs duties or import taxes. Originally intended to save the government the cost of collecting small levies, the threshold was gradually raised over the decades to meet the realities of modern e-commerce.

As the BBC report noted, the impact of the rule was massive: over 90% of all parcels entering the U.S. used the de minimis channel, according to U.S. Customs and Border Protection (CBP). Chinese e-commerce firms took particular advantage of this policy to flood the U.S. market with inexpensive products, often shipping directly from Chinese warehouses to individual American consumers.

Supporters of the exemption viewed it as a customs efficiency mechanism, while critics increasingly warned it undercut U.S. manufacturers and retailers, created unfair competitive conditions, and was abused by criminals to smuggle illicit substances.

President Donald Trump, who has made combating both unfair trade practices and the fentanyl crisis a cornerstone of his domestic agenda, acted earlier this year to suspend the de minimis exemption—a move that caught many logistics providers and online retailers off guard.

According to the information in the BBC report, the initial suspension in February created significant logistical chaos. The U.S. Postal Service temporarily halted shipments from China and Hong Kong, and customs officials were overwhelmed by the increased volume of parcels requiring inspection and duties.

In an executive order justifying the policy, the Trump administration highlighted the role that low-value parcels play in the opioid crisis, specifically citing Chinese shippers using “deceptive practices” to hide fentanyl and synthetic opioids in small shipments.

“These drugs kill tens of thousands of Americans each year, including 75,000 deaths per year attributed to fentanyl alone,” the executive order states, as reported by the BBC.

While the Biden administration also explored options to reform the de minimis policy—introducing proposals last year to reduce abuse—Trump’s move represents the most direct and aggressive action to date.

Temu’s decision to localize its U.S. sales and distribution model may reflect a broader realignment of global e-commerce strategy. The BBC report indicated that by shifting operations domestically, Temu aims to maintain access to the lucrative American consumer base without violating new trade restrictions.

Still, the move could alter the platform’s competitive edge, especially if it results in higher prices, slower restocking, or fewer product offerings. One of Temu’s key selling points was ultra-low prices, made possible by direct-from-China shipping, bypassing middlemen and tariffs. That advantage now disappears—at least in the U.S. market.

For American consumers, the new fulfillment model could mean faster shipping and potentially more oversight of product quality, but also reduced selection and cost increases in some categories, as was noted in the BBC report.

For U.S.-based sellers, Temu’s new focus on domestic partners could present new business opportunities, as the platform seeks to onboard suppliers and warehouses within American borders.

Since returning to the White House in January, President Trump has made good on his campaign promises to protect American industries by unleashing a fresh wave of tariffs on Chinese imports. As the report at the BBC noted, some Chinese goods now face combined tariff rates of up to 245%, with new duties reaching as high as 145% in addition to existing levies.

This policy surge culminated in the dismantling of the de minimis exemption, with packages from mainland China and Hong Kong now subject to a 120% tax or a flat fee. That fee started at $100 per parcel and will double to $200 in early June, according to the BBC report.

For American consumers, the end of the exemption spells steep price hikes on popular low-cost goods sourced directly from Asia. As the BBC report explained, prior to these tariffs, shoppers were already warned about looming cost increases. The American Action Forum, a conservative policy group, estimated that scrapping the de minimis rule would create between $8 billion and $30 billion in additional annual costs, most of which would be passed directly to consumers.

But the impact is not confined to the U.S. In response to mounting political pressure and the visibility of platforms such as Temu and Shein, governments in the United Kingdom and European Union are now reassessing their own low-value import exemptions.

The BBC report indicated that in the UK, parcels valued under £135 currently enter duty-free. But Chancellor Rachel Reeves recently announced a policy review, stating that these cheap imports were “undercutting the British High Street and British retailers.”

Likewise, the European Commission has proposed eliminating its €150 duty-free threshold, which would align the EU with U.S. efforts to level the playing field for domestic merchants.

Despite the Trump administration’s argument that scrapping the exemption will disrupt the synthetic drug pipeline, some experts question the effectiveness of this strategy. According to U.S. authorities cited by BBC, most fentanyl and related substances enter through the southern border with Mexico, not through international mail.

The National Foreign Trade Council (NFTC), a pro-free trade group, warned that the policy change may misdirect critical customs resources. “Removing the de minimis exemption would shift the CBP’s focus away from the border, where a vast majority of illegal substances and products are entering the country,” the group said.

The NFTC further argued that Customs and Border Protection (CBP) would need to hire and train new personnel, diverting manpower from the already strained southern border or costing taxpayers millions in operational adjustments.

Whether the dismantling of de minimis marks a turning point in U.S. trade enforcement or simply a short-term shock remains to be seen. What is clear, as the BBC thoroughly reported, is that this move represents a broader recalibration of the global e-commerce landscape.

By ending what many critics called a backdoor for foreign competition and smuggling, the Trump administration has sent a strong message: the United States is reclaiming control over its trade borders.

As other nations—particularly in Europe—follow suit, online shoppers around the world may soon face a new era of fewer bargains, slower shipping, and more taxation. In the words of one trade expert, “The golden age of duty-free e-commerce is coming to an end.”