According to market research firm Sensor Tower, the daily active users of Temu, the global discount e-commerce platform under Pinduoduo Holding, plummeted by 58% in the United States in May.
This significant decrease was attributed to the executive order signed by United States President Trump that revoked the “De Minimis” policy on May 2. The policy had granted tax exemption for small packages originating from China and Hong Kong with a value below $800, which had facilitated the influx of fentanyl and the surge in imports of cheap clothing, toys, and furniture from China via online platforms like Temu, Shein, and Amazon Haul.
The “De Minimis” policy, initially introduced to promote international trade, had been criticized by both parties in the United States for its role in fueling illicit activities and flooding the market with low-cost goods.
On May 13, the White House announced a revised executive order signed by Trump, adjusting the tariff policy for small packages from China. Starting from May 14 in the Eastern US time zone, the tariff rate for small packages entering designated US tariff zones from China, Hong Kong, and Macau was reduced from the original 120% to 54%, while maintaining a $100 per item tariff threshold.
For years, Temu and Shein have leveraged the “De Minimis” policy to ship goods directly from Chinese suppliers to American consumers, thereby keeping prices low. However, since the implementation of the comprehensive trade tariffs by Trump, both platforms have experienced a decline in sales and customer growth, with Temu showing a more pronounced downward trend compared to Shein.
The tariffs have also necessitated price increases by both platforms. According to data from Bloomberg’s credit and debit card analytics company, Second Measure, Shein’s US sales for the week of April 25 to May 1 dropped by 23% compared to the week before the price hike, while Temu’s sales decreased by 17% during the same period. This decline in sales marks a stark contrast to the surge witnessed in March and early April, when consumers stockpiled various goods in anticipation of price hikes.
Temu has not responded to Reuters’ request for comments. Morgan Stanley stock analyst Simeon Gutman noted in a report in May that following the end of the tariff exemption period, Temu saw a significant decrease in user engagement.
On May 27, Pinduoduo Holding released its first-quarter financial report, revealing a 47% profit drop and a 43% surge in marketing expenses. Company executives disclosed during an earnings call with analysts that the tariffs had placed significant pressure on merchants.
An analyst from HSBC stated in a report that Temu’s merchants can now ship individual orders from China to US warehouses partnered with Temu, but they must deal with tariffs, customs fees, and paperwork. Temu continues to handle order fulfillment, pricing, and online operations locally.
Bloomberg reported on May 27 that Temu has been striving to expand into other markets to reduce its reliance on the US, but it faces potential regulatory challenges in those markets as well. Japan, a major Asian market, is considering reviewing its tax exemption policy for small packages. The European Union is also contemplating imposing fixed fees on these packages, primarily originating from China.