Temu, a Chinese e-commerce company whose position in the U.S. was shrinking due to the Donald Trump administration’s abolition of the “small parcel tax exemption” system, has started to tap the U.S. market again with aggressive marketing strategies.
Bloomberg reported on the 8th that “Temu is attacking the U.S. market again by launching a large discount offensive against its competitor Xuin.” According to reports, as of the beginning of this month, the price of Temu’s 25 best-selling products was 18% lower on average than at the end of April. The price is lower than at the time when tariff-free imports were possible due to small duty-free regulations.
Specifically, the price of soft mattress protectors fell 63 percent from the end of April to $2.88, the largest decline. In addition, more than half of the 25 best-selling models, including plastic cutlery sets (-15%), dual motor desk fans (-26%), and wireless impact drill kits (-32%), saw double-digit price declines.
Temu has also suspended the imposition of import fees, which have been a major factor in raising consumer prices. After the Trump administration’s abolition of the small parcel duty-free system, some customers had to pay more taxes than the price of goods, which Temu took on some of the costs to reduce the burden on consumers.
Temu is pressuring sellers to expand inventory with significant discounts ahead of the U.S. year-end peak season, according to officials familiar with the matter. “Recently, Temu has induced us to give more exposure in the app if we lower the price through the seller portal,” a seller said.
Temu, which has grown into a model that delivers small packages directly from Chinese factories to U.S. homes, has been directly hit by the abolition of tax exemption for small packages. This is because most products are priced below $800, which is the standard for small duty-free, so the price competitiveness has fallen significantly due to the abolition of the system. In fact, Temu’s U.S. sales plunged more than 30% in some weeks in June, shortly after the abolition of small duty-free.
Temu’s return to the U.S. market seems to be due to the calculation that sales growth is possible even after the abolition of the duty-free policy. Bloomberg News did not reveal specific figures, but said that Temu’s rival Xu Yin’s sales in the U.S. slowed for a while immediately after the end of the small duty-free system and soon recovered.
“Temu’s parent company, PDD Holdings, seems to have recently changed its attitude,” Bloomberg reported. “Many Temu sellers in China are welcoming the expansion of sales channels in the U.S. even if margins are reduced and generally agree to lower prices.”
Temu has also begun to re-enforce its once-stalled advertising campaign. According to mobile advertising platform Appgrowing Global, the number of new daily ads decreased to dozens in the second quarter, but recently it has increased from thousands to as many as 10,000 a day. However, it is still low compared to the level that exceeded 20,000 daily cases before the tariff was imposed.
JENNIFER KIM
US ASIA JOURNAL
