Temu, the cross-border e-commerce platform under Pinduoduo, has recently made a significant announcement. On May 3rd local time, Temu declared that it would halt the direct sales of goods imported from China to American customers through its platform. Instead, future sales in the US market will be handled by local sellers.

As reported by USA Today, this adjustment means that American consumers will no longer directly purchase products shipped from China on the Temu platform. Instead, they will buy goods stored in warehouses within the United States.

Temu informed foreign media that under the new business model, the platform’s products will be free from additional import tariffs or customs fees. Moreover, it avoids the costs associated with outsourced freight transportation, enabling Temu to maintain its competitive edge of offering lower product prices. Additionally, Temu stated that the company is actively recruiting local American sellers to join the platform. By leveraging local logistics channels, it aims to help local merchants reach more consumers and expand their businesses.

The immediate trigger for this event was the policy adjustment announced by the US Customs and Border Protection (CBP) on May 1st. Effective May 2nd, the CBP cancelled the duty exemption treatment for small parcels (valued at no more than $800) from the Chinese mainland and Hong Kong. According to the CBP’s latest announcement, all goods shipped from China to the United States must go through formal customs declaration procedures (such as category 11 or category 01 declarations) and pay the full amount of tariffs and fees.

In fact, since the Trump administration took office, there have been several changes to the tariff collection thresholds for small parcels. The Trump administration initially announced on February 1st that it would cancel the “de minimis” duty exemption for small parcels from China but revoked the decision later that month. However, on April 2nd, Trump signed an executive order to reinstate the decision to cancel the duty-free policy for small parcels of Chinese goods, which came into strict effect on May 2nd. Currently, e-commerce products imported from China to the United States may face tariffs of up to 145%.

After the cancellation of the duty-free policy, Temu, under the pressure of cost and supply chain challenges, has been actively seeking ways to transform. To ensure an adequate supply of goods in local warehouses, Temu has been accelerating the recruitment of American sellers to join its platform. To attract sellers to use US local warehouses, Temu has borne a significant proportion of the warehousing lease costs and even expanded the coverage of its local warehouses from 15 cities to 40 cities. According to industry media analysis, before Temu’s transformation to local warehousing, consumers had to bear import fees as high as 130% to 150% of the product price when purchasing directly shipped goods, and the cost of some orders even exceeded twice the price of the products themselves. In fact, over the past year, Temu has been continuously increasing its local inventory in the United States to cope with changes in the international trade environment and adjustments to customs policies.

In addition to the transformation of its warehousing and supply chain, Temu has also invested a great deal of effort in its local operations. Previously, to promote its localization strategy, Temu has been aggressively poaching talent from American e-commerce giants such as Amazon and Walmart. It has successfully recruited many senior executives with a salary increase of 40% to 60%. According to foreign media reports, in the first quarter of 2025, Temu actively built its local operation team in the United States by poaching at least 12 Amazon merchant acquisition managers, Walmart supply chain experts, and TikTok e-commerce operation leaders.

However, with the slowdown in the profit growth rate of its parent company, Pinduoduo, Temu, which has been a major driver of Pinduoduo’s revenue growth in recent years, also faces significant pressure. Pinduoduo’s Q4 2024 financial report showed that its revenue was 110.61 billion yuan (RMB), a year-on-year increase of 24%, which was lower than the market’s expected 115.62 billion yuan. This led to a 7.3% decline in Pinduoduo’s pre-market stock price on that day, indicating an obvious slowdown in revenue growth. Some market institutions have speculated that in 2024, among Pinduoduo’s nearly 200 billion yuan in commission income, Temu’s commission income contributed more than half. However, Temu still has not achieved profitability, with an estimated loss of approximately $3.5 billion that year.

To cope with market pressure, several overseas data agencies have pointed out that Temu significantly reduced its advertising and marketing investment in the US region in April. Independent e-commerce analyst Juozas Kaziukenas noted that this signals the company’s attempt to reduce costs. Although it does not necessarily mean a significant decline in Temu’s usage, it does imply that Temu may temporarily give up acquiring new users in the US market. Data from the market research firm SimilarWeb also shows that since April, the number of downloads of Temu on the US App Store has dropped sharply by 62%.

Similar to Temu, SHEIN, another cross-border e-commerce giant, has recently announced that it will increase product prices to cope with the pressure of tariff adjustments. At the same time, SHEIN is actively laying out its global supply chain and plans to transfer the production of orders for the US market from China to other countries to avoid the high US tariff policies.

With the US government increasing tariffs on China and canceling the duty-free policy for small parcels, cross-border e-commerce giants like Temu and SHEIN have been adjusting their platform strategies to adapt to the new market environment. It can be predicted that the cross-border e-commerce industry is entering a more complex and highly competitive new stage. In the future, how to balance price competition and compliance costs in a more volatile international trade policy environment has become an urgent issue for major cross-border e-commerce platforms to address.