Online shopping platform Temu is altering its supply chain strategy in response to new tariffs imposed by the Trump administration. The company plans to shift a significant portion of its supply chain away from China due to the new tariffs introduced by former U.S. President Donald Trump. This move could result in an increase in prices for the budget-friendly shopping app.
Temu, owned by PDD Holdings, is moving away from its original model, which provided control over pricing, shipping, and marketing. Instead, the company is transitioning to a “semi-supervised” model, which allows sellers to manage bulk shipments to U.S. warehouses.
This change in the supply chain could have widespread effects on all of Temu’s U.S. operations. Due to the high delivery costs and the potential loss of logistics efficiency previously offered by the company, Temu may see higher prices on its platform. This shift coincides with potential changes in the U.S. “de minimis” rule, which could affect both Temu and its competitor Shein.
Price Increases Likely on Temu
Temu has not yet made the transition to the “semi-supervised” model mandatory. However, some Temu sellers have been informed that those who join the new model will be given priority. The company ultimately plans to shift all of its U.S. operations to this new model.
This change poses a risk of price inflation on the marketplace owned by PDD Holdings Inc., as sellers may no longer benefit from the shipping and transportation economies offered by Temu. Additionally, they may be forced to absorb the higher delivery costs resulting from Trump’s punitive measures.
By making this move, Temu distances itself from the model pioneered by Amazon.com Inc., which maintains significant control over its logistics and delivery network. This network supports Amazon’s market share, which holds 38% of online spending in the U.S.
Both Temu and its competitor Shein, China-based businesses, have surged in popularity thanks to American consumers’ demand for cheap products. However, they now face the termination of the “de minimis” rule for small parcels. Although the change has been delayed, the loss of this rule will have a significant impact on the majority of products sold by these companies in the U.S.
