Temu is back to shipping directly from China to the U.S., marking a significant win for the budget-friendly e-tailer and value-conscious American consumers.
The move follows months of uncertainty caused by escalating tensions between the U.S. and China, two of the world's strongest economies.
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Known for its wide range of products and incredibly low prices, Temu has reshaped online shopping and is quickly staking a claim in the U.S. retail market. The Chinese e-tailer has taken millions of shoppers away from traditional stores and even giant rivals like Amazon (AMZN) .
However, Temu's momentum came close to its end earlier this year.
Tariff hikes spark a trade war between the U.S. and China
In April, former President Donald Trump announced he would implement new tariff increases on imported goods, including an additional 10% baseline tariff on most products.
He also revealed plans to eliminate the “de minimis” rule, which allowed packages to enter the U.S. duty-free as long as they didn't exceed $800 per day for each recipient.
This announcement caused concerns among cross-border sellers like Temu and U.S. companies that rely on foreign goods.
Starting May 2, all shipments from China to the U.S. under $800 were subject to a 120% tariff equal to the value of the package or a $100 fee per package. Depending on the postal service used, tariffs could go up to 145%.
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The rise in costs led Temu to halt its direct shipping services from China to the U.S. The company warned customers of upcoming price hikes and urged them to shop as much as possible before raising prices after April 25 to mitigate costs.
China responded with a retaliatory 125% tariff on U.S. imports, sparking a brief trade war. However, by May, both nations agreed to a temporary 90-day tariff pause. Under the deal, China reduced its duties to 10%, and the U.S. lowered tariffs on Chinese goods to 30%.
The agreement was extended in August for another 90 days.
Tariffs changes hit Temu, but demand remains strong
Following the pause, Temu quietly resumed direct shipping from China to its U.S. customers in July, according to suppliers, partners, and investors, as the Financial Times reported.
With its resumed direct shipping, Temu's parent company, PDD Holdings (PDD) , increased its Temu advertising budget in the U.S. after making spending cuts. This move aims to regain lost market share and customer loyalty.
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Temu's temporary halt had financial consequences for PDD Holdings, causing its operational profit to fall 21% year over year in the second quarter of fiscal 2025.
Related: Temu makes a huge dreaded change amid high China tariffs
Still, the company's total revenue increased 7% to 104 billion yuan (around $14.5 billion), reflecting continued consumer demand for Temu's low prices amid ongoing economic uncertainty.
“Together with our merchants, we are actively exploring new business models for the global business, seeking new growth opportunities and navigating the ups and downs of the market cycles,” said PDD Holdings Co-CEO Chen Lei in an earnings call.
“Our focus remains on investing for the long term, such as strengthening the ecosystem, driving value chain upgrades, and delivering tangible benefits to our consumers.”
