Temu, the U.S. online retail sensation owned by China’s PDD Holdings Inc., is abandoning its reliance on low-cost Chinese imports that fueled its meteoric rise.
The company announced it will transition to a “local fulfillment” model, exclusively selling goods from U.S.-based merchants to American consumers for the foreseeable future, according to an emailed statement.
The move aims to sidestep escalating U.S. tariffs and the recent elimination of the de minimis tariff exemption for small parcels, which had previously allowed e-commerce giants like Temu and Shein Group Ltd. to offer ultra-low prices.
Temu, which burst onto the U.S. market a few years ago with budget-friendly products ranging from clothing to household goods, said it is actively recruiting local merchants to support the new strategy.
The company pledged to maintain its competitive pricing for U.S. consumers despite the shift.
“The move is designed to help local merchants reach more customers and grow their businesses,” Temu said. It’s also “part of Temu’s ongoing adjustments to improve service levels.”
As of last week, the PDD unit has largely passed on the new import taxes imposed by Donald Trump to U.S. consumers, adding a clear surcharge at checkout. Fast-fashion giant Shein also increased the prices of its products in the U.S., with some items seeing price hikes of over 300%.
In February, Temu asked Chinese factories to ship goods in bulk to U.S. warehouses under a “half-custody” model, where it manages the online marketplace.
However, as U.S. inventory depletes, prices could increase when factories restock, particularly if tariffs on Chinese imports remain at 145%.
Major U.S. retailers haven’t raised in-store prices yet, but they’re in a tough spot. Chinese suppliers are unwilling to absorb the tariffs, and uncertainty remains about how long the additional levies will last.
Companies like Walmart Inc. and Target Corp. may face political pressure to absorb some, if not all, of the cost increases, potentially helping to lessen the direct impact on shoppers.
