Temu ditches Chinese imports model to avoid Trump's tariffs
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'The move is designed to help local merchants reach more customers and grow their businesses,' Temu said. It's also 'part of Temu's ongoing adjustments to improve service levels.'
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As of last week, the PDD unit had appeared to pass on nearly all of Donald Trump's new import taxes to US consumers, by adding a clearly labeled surcharge for buyers at checkout. Fast-fashion giant Shein also raised US prices of its products, with hikes of more than 300 percent for certain items.
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Temu had asked Chinese factories to ship their goods in bulk to American warehouses back in February in what it calls a 'half-custody' framework, where it only manages the online marketplace. However, as inventory in the US depletes over time, prices could eventually go up when factories replenish stocks if tariffs on Chinese imports remain elevated at 145 percent.
Major US retailers haven't yet raised the prices of goods on shelves. But they're caught in a bind, as Chinese suppliers refuse to absorb tariffs and uncertainty mounts over how long the extra levies will be in place.
Companies like Walmart Inc. and Target Corp. could also come under political pressure to absorb some - if not all - of the cost increases, which could help cushion the direct impact on shoppers.
The example of Amazon.com Inc. - which said on Tuesday that it wouldn't display the cost of US tariffs on products, after the White House slammed the reported move and Trump complained to Jeff Bezos - underscores the difficult position US consumer retailers are in. If they don't pass on cost increases, profit margins will narrow and become a drag on their stock price.
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