Chinese e-commerce group Temu, owned by PDD (PDD) has stopped shipping small parcels to the U.S. in the wake of President Trump’s new trade strategy.
U.S. Sellers Not Chinese
However, the PDD share price as well as that of Chinese rival Alibaba (BABA) were respectively 3.7% and 4% higher in early trading on hopes that trade talks between the world’s two largest economies could soon ease tensions.
According to a report in the Financial Times, all sales on Temu’s U.S. marketplace will now be fulfilled by local U.S.-based sellers, rather than Chinese sellers. This is in response to the huge 145% tariff rate placed on Chinese imports into the U.S. by Trump but also the ending of the “de minimis” customs rules, which exempted inbound parcels worth less than $800 from import duty.
This means small household goods such as bath brushes, shoes and bags sold on sites such as Temu will be affected. From today these low-value shipments from China and Hong Kong are subject to a 120% tariff or a flat $100 fee, depending on how goods are delivered. The $100 fee will be doubled from June 1.
Trade Talk Hopes
Indeed, the FT said that Temu has been busy building up a team of U.S. sellers for over a year now and was looking for more merchants. Part of the rationale behind Trump’s tariff strategy was to boost U.S. manufacturing jobs but it is likely he’d also be happy with a growth in Stars and Stripes-based sellers as well. The danger, of course, is that such a move will, at least in the immediate term, see a decline in Temu’s U.S. business.
It is also a worry for BABA and fashion retailer Shein which is also looking to shift production for its U.S. business out of China. The disruption caused by the Trump administration even threatens its plans for a U.K. IPO this year.
However, hopes were raised for Chinese stocks today when the Chinese government reportedly said they were “evaluating” options to begin trade talks with the U.S. This is a notable shift in tone as they had previously said they would only consider discussions if the tariff hikes were dropped.
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