Tariff Changes Leave Shoppers and Businesses in Limbo: The Case of Temu
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The past few days have been akin to an emotional roller coaster for consumers and businesses alike, particularly regarding the recent changes in tariffs. While the fluctuations in the stock market might usually trigger concern, the reason for my anxiety lies in a more personal realm my recent order from Temu hangs precariously in the balance.
In anticipation of what has been dubbed "Liberation Day," when new tariffs would officially go into effect, I seized the opportunity to place one last order with Temu. I was determined to get my hands on some of the absurdly low-priced plastic items shipped directly from China. With a childs birthday approaching, I was specifically in search of some fun new bubble machine toys.
Timing was key; I managed to sneak in my order just before the impending changes hit. The very next day, the announcement of new tariffs sent shockwaves through the stock market. As if that wasnt enough, a further surprise came when Donald Trump decided to delay most of the tariffs for 90 days, with the notable exception of those impacting China.
Temu operates on a different model compared to a company like Apple. While Apple could see its international iPhone imports affected, Temu directly ships its products from China, benefiting from a longstanding loophole known as the "de minimis" exception. This rule allowed packages valued at under $800 to be shipped to the U.S. without incurring duties, creating a significant advantage for companies like Temu.
However, Trump recently signed an executive order that effectively ends this de minimis exception. Consequently, products entering the U.S. are likely to face duties, even if they fall below that $800 threshold. His initial directive stipulated that these previously de minimis packages would now incur a $25 fee per item or a duty of 30% of their value though it remains unclear which of the two fees would apply.
This week, the situation escalated even further. Trump announced a dramatic increase in the charges to $75 per item or 90% of the order's value, which poses a significant challenge for low-cost items. For instance, my $8 bubble camera is now at risk of becoming a rather unappealing purchase due to these new costs.
Fortunately for me, the new tariff rules are set to take effect starting on May 2nd, and my order is predicted to arrive before then. Yes, you can breathe a sigh of relief for me.
According to the latest information on Temu's website, my order has successfully cleared customs and is en route, with an estimated delivery window between April 10-17.
As for the broader implications of these tariff changes on Temus operations, as well as for similar businesses like Shein, which also benefited from the de minimis exception, the outlook appears grim. Temu is currently running a promotional event dubbed "Temu Week" on its site and app, an initiative it has used in the past to remain competitive against Amazon's Prime Week. However, it's still unclear whether prices have been slashed on specific items as part of this promotion. I reached out to Temu for clarification on whether this event was pre-planned or a reaction to the tariff news but have yet to receive a response.
In anticipation of the tariff impacts, Temu has been diversifying its shipping supply lines and establishing local warehouses in the U.S. to mitigate the effects of losing the de minimis loophole. However, with these newly implemented hefty tariffs, goods shipped from China to these local warehouses will still likely incur the new charges, complicating the situation even further.
Given the rapid pace of change in this scenario, predicting the long-term implications for consumer itemsfrom a $5 gadget from Temu to a $1,000 iPhonehas become increasingly challenging. My advice? There are only a few days left to place worry-free orders with Temu before the May 2 deadline arrives. So, shop as you see fit!