Bursting of Temu's Bubble: Crashing Sales in the US as Growth Engine Falters
U.S. sales for Temu are experiencing a significant decline
Business is biting the dust for Temu, the Chinese discount e-commerce platform, in the US. The reason? New tariff regulations. According to reports, payments from American consumers to the company showed a sharp decline of over 25% between May 11 and June 9. This steep fall is connected to the withdrawal of their tariff exemption in the US, and Temu's seemingly ceased advertising activities in the country. The EU, on the other hand, remains a promising market.
Temu had been a popular choice for frugal shoppers in the US thanks to its tariff exemption, which allowed shipments of goods valued under $800 from China to the US without customs duty. However, former US President Donald Trump abolished this exemption as part of his aggressive tariff hikes in 2025. This move affected roughly a million packages with Temu orders daily, causing a significant blow to the company's business.
Facing the Heat in the US: Adapting to New Rules
Temu announced in April 2025 that it would adjust its business model for the US to comply with the new tariff regulations. Instead of delivering from China, the platform vowed to supply American customers from warehouses within the country. The company reportedly attempted to persuade its merchants to build up inventories in these centers to keep the shipping volume intact. However, these warehouses apparently haven't been sufficient, and prices have increased due to the new tariffs in certain cases.
Additionally, Temu seems to have scaled back its aggressive advertising efforts in the US dramatically. Data from analysis and consulting firm AppGrowth shows that Temu was running tens of thousands of new online ads per day until April 9, which then dropped to less than 100 per day. This reduction signifies the abrupt halting of Temu's growth engine and could potentially mean the end of its remarkable growth spurt in recent years.
Riding the Wave in the EU: Fortune Favors the Brave
The good news for Temu is that it still enjoys duty-free status in the EU for shipments valued up to €150. This exemption attracted several billion packages to the EU in 2020, the majority coming from China. Similar to the US, domestic retailers in Europe grumble about a competitive disadvantage due to the duty-free cheap competition offered by Temu. Consumer advocates also caution about a significant portion of Temu's products not complying with European safety standards.
The European Commission has proposed a tariff reform that would put an end to the duty-free status for small packages. This proposal is supported by the German Finance Minister Lars Klingbeil. The possible termination of the exemption in the EU may force Temu to adapt its business strategies, and could lead the company to expand its focus on the EU market to minimize the impact of US tariffs.
In conclusion, the 2025 US tariff hikes have increased import costs for companies like Temu, pushing them to reassess their supply chains and focus on or expand operations in markets such as the EU, which offers relatively less punitive tariff regimes. However, surviving the storm will require careful compliance with EU trade rules, strategic changes, and preparedness for potential policy fluctuations.
Sources: ntv.de, mbo
- Mail Order
- E-commerce
- China
- USA
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- Tariffs
Additional Insights:- The U.S. government imposed a range of tariffs in 2025, including raising steel and aluminum tariffs to 50% and adding additional 10-25% tariffs on various Chinese-made goods, affecting many product categories, including household appliances and steel-containing items, which could have been part of Temu's inventory[3][5].- The introduction of a 10% "reciprocal" tariff on all imported goods, with higher rates specifically applied to Chinese goods (up to 125%), means that Temu likely faces elevated import costs across a broad product range[4].- The revocation of duty-free treatment for shipments under $800 from China, Canada, and Mexico means that small shipments, which are typical in e-commerce, now incur tariffs, increasing operational costs and potentially retail prices for Temu[5]. This could reduce Temu's competitiveness in the U.S. market or compress profit margins, or force the company to adjust its sourcing or logistics[5].- The EU offers a relatively more stable or cost-effective environment for Temu to operate, since it has historically lower tariffs on consumer goods from China compared to the current heightened U.S. tariffs[4]. This factor may incentivize Temu to expand its operations in the EU to mitigate US tariff impacts.- To adapt to EU trade rules and consumer preferences, Temu may need to adapt its logistics, supplier networks, and pricing strategies, potentially using the EU as a hub for global distribution.- The possible termination of the exemption in the EU may force Temu to navigate EU trade policies and potential future policy fluctuations carefully, as geopolitical tensions and trade disputes could impact the European market.
- The community and employment policies of Temu may need to evolve as the company adjusts its business model to comply with new tariff regulations in the US, sending a wave of potential changes to its warehousing, inventory management, and advertising policies for its workers.
- In light of the US's new tariff regulations and Temu's financial losses, the company might consider diversifying its investments and financial strategies, seeking stability in the EU market where it still enjoys a duty-free status, potentially partnering with local industries to minimize risks and ensure long-term growth.
