Temu will stop sending ultra-cheap goods straight to the US after trade loophole crackdown

• Temu is ceasing direct Chinese exports to the US, shifting to a local fulfillment model.
• The change follows the closure of a trade loophole allowing duty-free imports under $800.
• Higher prices are expected as import taxes may now apply to previously exempt goods.

The era of ultra-cheap goods shipped directly from China via Temu is coming to an end.

The e-commerce giant, which added "import charges" to customers' orders at the end of April, announced a dramatic overhaul of its US business model.

Temu is ceasing direct-from-China shipments in response to the federal government closing a long-standing trade loophole.

The "de minimis" exemption allowed packages valued under $800 to enter the US duty-free, a critical advantage Temu and competitor Shein exploited to offer cheap prices.

The exemption, born from a 1938 law meant to simplify customs, became a linchpin of modern e-commerce logistics. Its $800 threshold fueled an explosion of small packages flooding US ports, accounting for the vast majority of import entries, according to CBP data.

Washington moved to close the loophole under the Trump administration, with the two-pronged goal of cracking down on illicit shipments like fentanyl smuggled in small packages and creating fairer competition for American retailers burdened by tariffs bypassed by foreign shippers.

Similar concerns about the rule's exploitation were previously flagged by the Biden administration.

In a statement shared with Business Insider, the company said: "Temu's pricing for US consumers remains unchanged as the platform transitions to a local fulfilment model. All sales in the US are now handled by locally based sellers, with orders fulfilled from within the country.

"The move is designed to help local merchants reach more customers and grow their businesses. This shift is part of Temu's ongoing adjustments to improve service levels."

The impact on consumers is expected to be direct: higher prices.

Goods once exempt could now be hit with hefty import taxes or fees, potentially starting at $100 or based on percentages exceeding 100% of the value. Policy watchers have consistently warned that these new costs would likely be passed on to shoppers.

Besides the cost, officials said the huge number of these packages overwhelmed customs workers and strained inspection resources.

The UK and EU are both considering similar policy shifts, which could prompt a hike in prices in Europe soon.