Temu has announced a major change to how it serves American shoppers. The online platform will no longer ship goods directly from China to the United States. Instead, it will adopt a local fulfillment model, relying on U.S.-based sellers and warehouses. The move follows growing pressure to close trade loopholes and boost domestic commerce.

Local Fulfillment Replaces Global Shipments

Temu said all U.S. orders will now be handled by local businesses inside the country. Goods will be shipped from domestic warehouses to reduce delivery times and improve service.

A company spokesperson explained, “We are expanding our partnerships with American firms to help them reach new buyers more easily.”

This shift comes after recent changes to U.S. trade policy, which aim to close the popular “de minimis” loophole used by foreign sellers to avoid import taxes.

The End of the “De Minimis” Loophole

The de minimis rule allowed duty-free imports of packages under $800. Retailers like Temu and Shein used this to send small, cheap packages from China without paying tariffs. The exemption, first created in 1938, was meant to reduce the cost of processing low-value shipments.

Over time, the limit increased, creating a path for Chinese sellers to enter the U.S. market with minimal costs. Customs officials reported that over 90% of U.S. cargo shipments in 2023 qualified under this rule.

In response to criticism, lawmakers have taken steps to close the loophole. The result: a higher tax burden on international shipments and a pivot to local sellers by platforms like Temu.

Links to Drug Smuggling Spark Policy Change

The U.S. government linked the loophole to the smuggling of synthetic opioids such as fentanyl. Customs officials said that bad actors often hid illegal drugs in duty-free parcels to bypass checks.

An executive order claimed the loophole was being exploited by traffickers. In February, authorities briefly suspended the exemption. During that period, the U.S. Postal Service halted deliveries from China and Hong Kong.

Although the rule was later reinstated to avoid service disruption, stricter monitoring now applies. Customs has increased inspections and placed more focus on parcel contents.

Trump’s Return Ushers in Tougher Trade Rules

Former President Donald Trump returned to office in January and wasted no time reviving his hardline trade stance. His administration reintroduced tariffs on Chinese imports, with some reaching 145%.

Combined with new charges, certain products now face duty rates as high as 245%. Both Trump and President Joe Biden have criticized the de minimis rule, saying it hurts U.S. businesses and strains border enforcement.

Last year alone, over one billion packages entered the U.S. duty-free, up from 140 million in 2013.

Shoppers Face Higher Costs

Under the new rules, packages from China or Hong Kong under $800 will now face either a 120% tax or a flat fee of at least $100. That fee will rise to $200 starting in June.

This change means higher costs for consumers used to low prices on platforms like Temu.

The American Action Forum estimated that removing the exemption could cost U.S. shoppers between $8 billion and $30 billion annually.

Global Changes: UK and EU Follow Suit

The U.S. is not alone. The United Kingdom and the European Union are also taking aim at low-value imports.

In the UK, goods under £135 currently arrive tax-free. But Chancellor Rachel Reeves announced plans to end this, saying it puts British retailers at risk.

The EU has proposed removing tax exemptions on parcels worth under €150. These steps are expected to raise prices for online shoppers in Europe, much like in the U.S.

Experts Warn of Border Strain

Some experts question whether ending the exemption will solve the problems it targets. Customs already inspects low-value parcels like any other shipment.

Officials note that most illegal drugs still enter through the southern border, not by mail.

Critics argue the change could overwhelm border agents. The National Foreign Trade Council said the move might drain resources from more critical tasks. They warned Customs may need to hire and train more staff, slowing other operations.