As news of President Trump’s new tariffs have settled over the United States like a shockwave in the last week, many companies are realizing their operations are about to undergo a major change.
Industries from automotive to retail to tech have responded in different ways. Apple announced it would begin to source iPhones from India instead of China. Audi chose to hold cars shipped to the U.S. in port rather than offload them and have importers pay the 25% tax that has been levied. And Walmart asked some of its Chinese suppliers to consider cutting their costs 10% per round of tariff.
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While the tariffs pose varying levels of concern depending on what country is involved, China is in the worst spot right now. After the White House announced the tariffs, China retaliated by announcing an 84% retaliatory tariff on all imports to the U.S. And Trump responded to that by announcing that China would face 125% additional tariffs. Despite deciding on April 9 that the U.S. would be pausing on tariffs for 90 days, China will not be getting a pause.
It all brings to mind a company that’s seen tremendous success in the U.S. market in the past five years, with many speculating about just how hard of a hit it may be about to take.
Temu has been redefining low prices since its launch in Sept. 2022.
Image source: Raul Ariano/Bloomberg via Getty Images
The shopping app that redefined frugality
In late 2022, a new player entered the low-cost retail space: Temu, owned by Chinese company PDD Holdings. Much like SHEIN and Ali Express before it, Temu offered rock-bottom prices on everything from household goods to trend fashion.
However, Temu had one thing that the others in its class didn’t: lightning-fast free shipping. News outlets wondered at length how the company could take such a financial hit, estimating that its strategy was costing it millions in losses.
Shoppers, however, had not a care in the world, filling their carts to the brim with dozens of items that were a few dollars each. One of Temu’s slogans is “shop like a billionaire,” and it was clear people liked to, as the Temu app was the most downloaded of 2023. The company has said it ships over a million packages to the U.S. per day.
Related: Amazon takes on Temu and Shein in a big way
Enter tariffs into this situation, however, and you have an ocean-sized problem.
“Holy s***, Trump upped the de minimis on Temu and SHEIN from 30% to 90% or $25 to $75 per item. Then June 1, costs go from $50 to $150 per package,” user denisewu wrote on X.
Add to this that Temu parent company PDD Holdings was already navigating some extremely rough waters. In August 2024, PDD Holdings’ stock plummeted 30%, killing more than $50 billion in market value for the company. The stock also dropped by 18% this week after the tariffs were announced.
While some of the additional costs may be absorbed by companies like Temu, it is highly likely that its prices would need to go up in order to stay in business. Similar retailers such as SHEIN and Ali Express will face the same decision.
TheStreet has reached out to Temu for comment.
Related: Is Temu legit? What to know about the famously cheap shopping app
