Consumers facing higher costs as Chinese firms pass on tariff burden

by Bloomberg News

Discount Chinese retail app Temu appears to be passing on nearly all of Donald Trump’s new import taxes to US consumers, more than doubling the cost of some products in a move that may add to concern about the inflationary impact of tariffs.

Previously exempted from any levies under the so-called ‘de minimis’ rule, parcels priced up to $800 now face an ad-valorem tax — of 120% of a product’s value — or a per postal item fee of at least $100 starting May 2. PDD Holdings Inc.-owned Temu is requiring customers to pay those levies on top of the original cost of the goods.

A look at 14 shipped-from-China items on Temu’s bestsellers list showed taxes exceeded the value of the product. A $19.49 power strip, for instance, attracted $27.56 in import charges as of Monday, or 1.41 times the price of the product. However, there are no import surcharges on items that are already available in US warehouses, keeping the prices of such goods generally stable.

Among the top 80 items on Temu’s recommended bestsellers, 66 items are marked to be shipped from local warehouses, according to data compiled by Bloomberg. Temu and rival Shein Group Ltd. previously said they will start adjusting prices one week ahead of the May 2 de minimis tariff exemption removal.

The higher costs illustrate the impact of President Trump’s tariffs, and they risk changing how Americans shop and disrupting shipments from the likes of Temu and Shein. The increase is part of Trump’s wider strategy to force China to seek a trade deal that would narrow Washington’s trade deficit with Beijing.

Temu did not immediately respond to a request for comment.

Temu has been asking 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%.

Fast-fashion giant Shein also raised US prices of its products, with hikes of more than 300% for certain items.