In a recent development, President Donald Trump has announced a temporary pause on certain tariffs, providing a unique opportunity for companies like Temu and Shein to optimize their supply chain strategies. This decision has emerged from an agreement between the U.S. and China to reduce tariffs on most Chinese imports to 30% for a 90-day period. Significantly, this agreement also includes a relaxation of the "de minimis" rule, which affects low-value packages shipped from China to the U.S. These packages will now face a tariff rate of 54%, a substantial decrease from the previous rate of 120%.
The earlier high tariff rates had forced Shein to increase prices on its platforms, impacting U.S. consumers. Meanwhile, Temu had stopped direct shipments from China entirely, which led to some disruptions in fulfilling its U.S. orders. With the recent tariff reductions, both companies now have the opportunity to increase shipments from China, restock their U.S.-based warehouses, and fulfill existing orders. Supply chain experts believe this is a critical moment for these companies to reassess and realign their long-term strategies.
Anand Kumar, associate director of research at Coresight Research, notes that Temu and Shein are likely to increase their shipment volumes to the U.S. in the short term. This will allow them to better manage their supply chains and prepare for future challenges. Jason Wong, who works in product logistics for Temu in Hong Kong, explained that his company had relied on existing U.S. stockpiles to fulfill orders after the "de minimis" exemption ended. With the new tariff policy, Wong anticipates that bulk shipments subject to the 30% tariff rate will resume, helping replenish these stockpiles. He acknowledges that while a 30% tariff is still significant, it is a vast improvement over the previous 125% rate.
Despite these improvements, the tariff situation remains complex for small-value packages classified under "de minimis." The latest policy update maintains a $100 flat fee per postal item, while discarding a planned increase to $200 that was set to begin in June. Wong suggests that for Temu to fully resume its small-value shipments from China to the U.S., further relaxation of tariffs is necessary, which he expects will eventually happen.
Shein has not announced any cessation of direct shipments from China. However, it assures its customers that "tariffs are included in the price you pay," potentially leading to some price easing due to the reduced tariffs on low-value packages. In anticipation of changes to the "de minimis" exemption, Shein has diversified its supply chain by establishing manufacturing operations in countries like Turkey, Mexico, and Brazil, with reported plans to expand into Vietnam as well.
Both Shein and Temu have not yet responded to requests for comment. The end of the "de minimis" exemption on May 2 by President Trump was criticized by some analysts for negatively affecting local businesses and allegedly concealing illicit activities, such as fentanyl trade. The small-package tariff exemption had previously allowed Temu and Shein to maintain competitive prices on goods shipped directly from China. The U.S. government had temporarily suspended this exemption in February, only to reinstate it days later due to customs officials' difficulties in processing and collecting tariffs on a surge of low-value packages.
The temporary tariff reduction is also expected to impact U.S. competitors like Amazon, which hosts numerous third-party sellers offering products sourced or assembled by Chinese manufacturers. Trade experts predict that all companies will attempt to maximize their shipments to the U.S. during this 90-day window. Cameron Johnson, a Shanghai-based senior partner at consultancy firm Tidalwave Solutions, remarked that "all the companies are just going to scramble to get everything they can into the country as quickly as they can," emphasizing the urgency shared by all involved parties.
Anniek Bao and Dylan Butts, reporters for CNBC, have been closely following these developments as they unfold, providing insights into the broader implications for international trade and market dynamics.