Temu Switches Supply Chain Management Style Following Trump Tariffs

eCommerce giant Temu is reportedly overhauling its Chinese supply chain following new U.S. tariffs.

In a change that could lead to higher prices, the shopping platform will move away from a model in which merchants allowed Temu to handle things like price-setting, shipping and marketing, Bloomberg News reported Tuesday (Feb. 11), citing sources familiar with the matter.

Now, Temu is asking factories to ship their own goods in bulk to U.S. warehouses, employing what it refers to as a “half-custody” policy, in which it only manages its online marketplace, the sources told Bloomberg.

This shift is not yet mandatory, the report added, but Temu has indicated to its sellers that it will give priority to merchants who sign onto the new system. The company also plans to eventually move its U.S. operation to this new model, one source said.

PYMNTS has contacted Temu for comment but has not yet gotten a reply.

Bloomberg noted that the change threatens to raise prices on Temu as merchants lose the economies of scale in shipping and handling offered by the company, while having to deal with higher delivery costs driven by new tariffs imposed by the Trump administration.

The tariffs were already causing a headache for companies like Temu as they — initially — eliminated the “de minimis” exemption, a longstanding rule that allowed smaller packages to enter the country without paying a tariff.

The rule applies to packages worth less than $800 and is often used by Chinese eCommerce retailers to sell products at lower prices by shipping them directly to the U.S. The threat of this lost income led Shein, Temu’s chief rival, to reportedly consider lowering the value of its upcoming initial public offering (IPO) last week.

The White House later decided to hold off on eliminating the exception, though tariffs on China remain in effect. Trump also this week imposed new 25% tariffs on steel and aluminum imports.

The new levies have helped drive down consumer sentiment to its lowest level since July, according to preliminary results for the University of Michigan’s February Surveys of Consumers released last week.

Sentiment fell 5% this month, marking the second month in a row in which consumer confidence declined. The measure also slid 4% in January, the first drop in six months.

Surveys of Consumers Director Joanne Hsu said the decrease was in part due to consumers’ concerns about the impact of tariffs.

Hsu said that while all components of the index fell for February, the deterioration was “led by a 12% slide in buying conditions for durables, in part due to a perception that it may be too late to avoid the negative impact of tariff policy.”

The survey also found that many consumers are concerned that high inflation will return during the next year.