Temu and Shein Navigate Tariff Challenges With Strategic US Warehouse Shift

Temu and Shein have simply discovered themselves in a wierd spot within the new 90-day reprieve within the commerce warfare with China. President Trump has loosened the tariffs to 30% (down from 145%) as a part of a plan to open the negotiations for a brand new commerce deal.

Nevertheless, excessive tariffs stay on small packages shipped instantly from China — the type that Temu and Shein sometimes ship.

Till very just lately, Temu and Shein benefited from the de minimis exception, a loophole that allowed for packages underneath $800 in worth to ship with out responsibility. Trump closed this loophole beginning Might 2. He additionally carried out tariffs as excessive as 120% or a flat price of $100 per package deal (rising to $200 in June). These stay in impact, regardless of the 90-day deal, Axios reported Monday.

However Temu had a workaround technique that saved clients from having so as to add on large additional “import fees” on orders. Temu had already been increase warehouses within the US, which meant that some gadgets may ship regionally (and extra shortly).

Just a few weeks in the past, Temu modified its website and app to show nearly completely gadgets that shipped from US warehouses — merchandise that may keep away from these nasty additional charges. On the time, Temu instructed Enterprise Insider it additionally deliberate to work on recruiting extra US-based sellers.

In fact, this was a short lived resolution: finally, these US warehouses would want to get restocked, and the brand new bulk shipments can be topic to Trump’s 145% tariffs. After I wrote about this final week, I mentioned that Temu had just a few choices: shift to specializing in Europe or different markets, or ship to the US from different international locations.

However there was additionally one different viable possibility: wait it out and hope a commerce deal occurs quickly.

So this is the place Temu and Shein at the moment are: the tariffs for delivery on to clients from China are nonetheless onerous. That is unhealthy for them.

The excellent news is that if, as a substitute of delivery direct, suppliers ship huge portions to the businesses’ US warehouses, the state of affairs is best.

That is as a result of proper now, Temu and Shein— which additionally has US warehouses — have additional time to replenish these native warehouses with the decrease tariff fees. Temu, Shein, and the White Home didn’t reply to requests for remark.

For Temu sellers, it is not again to enterprise as traditional, however it’s undoubtedly excellent news. Here is what one vendor instructed Bloomberg:

For Solar Yang, who owns a enterprise promoting face- and body-painting instruments comparable to brushes and shade palettes on Temu’s on-line market, the excellent news couldn’t come quickly sufficient as he watched his stock dwindle at warehouses within the US, which accounts for all of his gross sales.

“Our entire workplace was shouting ‘hooray!’ after we learn the information,” Solar mentioned from his firm’s headquarters in Shenzhen close to Hong Kong.

Solar noticed mid-double-digit gross sales progress prior to now two months as American customers hoarded merchandise earlier than costs skyrocketed.

“Returning to 30% means we’ve no stress from worth hikes within the foreseeable future,” mentioned Solar, “I hope customers can achieve extra confidence and are available again to buy once more.”

So what does this imply? Effectively, I can undoubtedly say that, for now, that is nice information for these little women who need 30 dolls as a substitute of simply two. Temu and Shein have gotten one more life.