Photo-illustration: Intelligenmer; Photo: Temu/YouTube
The temposion is Pretty Simple: IT’S an app. Some of this stuff is entertaining, novel, or weird. Some of it is junk. or tear of it is just Regular Stuff You Can Buy Elsewhere, Including Through American Retilers Like Amazon, but Cheaper. Maybe it taks a while to show up, and Maybe It ‘Not Quite what you hoped for you orderhed it, but that part of a straightforward deal for temu’s users, who has spent billions of dollars – and on the platform, and for the thusands of Mostly merchants who sell.
What Makes This Arrangement Posible – In Addition to utterly opaque labore practices and a disregard for Environmental externalities – are a few strange and specific conditions. One is Heavily Subsidized Shipping: For Years, International Postal Treaties Effectatively Required The United States to Subsidize Small Packages Shipped Many Countries, Including China, Creating A Situation WHERE IT WAS WAS Cheer Sometimes to send a small parcel to north Carolina from Shanghai than from virginia. This is no longer the case, due in part to a thread to leave the universal postal by the Last Trump Administration, but Shipping from China to the Us Still relatively Cheap, Although Companies Like Temu, In a Rush to Get New Customers, Have Sometimes subsidized Shipping Costs for Sellers.
Another thing that makes a business like this vaable, or at least theoretically vaable, is something Called the de minimis Tariff Exemption, Which Allows Some Packages Valued Under $ 800 to bypass Scrutiny by US Customs and Border Protection and Ship to the US Tariff. Now, after aekend Executive Order from President Trump, that Condition is Changing, too:
President Donald Trump’s New Trade Levies Against China, Canada and Mexico Include A Broadside Against E-Commerce, with Apparent plans to extinguish a long-held tariff exemption for Packages Worth than $ 800.
Trump’s Executive Orders Directing 25% Levies on Canada and Mexico – Plus a 10% duty on China – Specify that the “de minimis” exemption for Small Packages No Longer Applies. Under the exemption, Products Below That Dollar Amount Are ABLE to Enter the US with Tariffs-A Boon for China’s E-Commerce Retaillers Who Ship Offen Cheer Directly to Consumers in the US.
There are some some caveats here: This Change comes via a brand-new the executive order, which government agencies and alike still figing out how to interpret and implement; Already, The Above-Mensioned Tariffs on Imports from Mexico and Canada Have Been “Paedsed” by the Administration. But closing the de minimis Loophole was a political priority for the Last Administration, Too, Which Had started A rulling process near the end of biden’s term. (Both the Biden and Trump Administrations Cied E-Commerce Competition with China and The Drug Trade as Reasons for Changing it; The Trump Administration Has emphasized The Latter.)
The fact that the end of the de minimis exception didn’t come out of left field, Howver, doesn’t make it lite of a big deal: for companies like and shein-as well as popular, but lsser-known aliexpress, not to mention chinese chinese on ebay and etsy, it Costs and Administrative Burdens Increase. Over the past year, tempting haen trying to get more sellers to shift inventory to American logistics firms or, in some cases, Spare Rooms in american homes; Shein Has Been Doing Something Similar. This means faster Shipping but Also Higher Costs; in Addition, Existting and New Tariffs on Chinese Imports Will Apply to Products SOLD THIS WAY.
This Sounds Like Great News for Amazon, whic haen worried about and reacting to shein and temp for years, and in some ways it is-the Company’s Fastest-Growing Competitors are LoSvantage, and Being for the Compete on Amazon’s Turf. In its eforts to take on the foreign retailers, Howver, Amazon, has Become a lot more like shein and temp. IT HAS MOVED DOWNMARKET AND RECENTLY LAUNCHED A Direct Competitor to Temu, a section Called Haul, Where Amazon Can Shop Direct-From-Choma Discounts. (SO FARI’S A DUD.)
How the retailers handle this relative to one another is currently up in the air. At the moment, the Change is Still Passing Through the Standard Trumpian “chaos at all levels“Phase of implementation;
At least as unclear is what customers of tempo and shein – who together make up a sizable portion of the adult American Public – Will Make of the Change. In the abstract, closing a trade loophole that gave chinese firms a Major Advantage Over American and May Have Aided the International Druug Trade is a fairly argument to make. SO is an argument that they can be enchallenge the production of semi-discosable goods destined for landfills. In Practice, Shein and Temu Are Broadly Popular, With Tens of Billions of Dollars in Year Sales and A Customer Base that Cuts Across Economic and Political Lines. or Recent Working Paper from the National Bureau of Economic Research Draws on Data About Shein and Temu Users to Out What Eliminate The de minimis Exemption Might Actually Mean for say, as well as who they are (Empphasis Mine):
The data clids direct-to-consumer shipments (defined as Shipments waisti below $ 5000), Their cheaper de minimis subset (Below $ 800), and the de mini original China Relatively More Important for Low-InCome Households. 73% of Direct Shipments imported by the poorest zip codes are de minimis compared to 52% for the richest zip codes. The Share of De Minimis Shipments from China Also Declines with Incom: 48% for the Poorest Zip Codes Compared to 22% for the Richest…
… These patterns, along with the exemptions from the much higher tariffs on imports from china… a pro-Poor trade policy: the avarage tariff on direct shipments to the poorest zip codes-0.5%-Lower than to the richest zip codes –1.5%. If it were elimmedated, The tariff schedule go flip flip from pro-Poor to pro-rich: The poorest zip codes face averaged tariffs of 11.8% compared with 6.5% for the richest zip codes.
These Estimates Were Made before Trump Announced an Additional 10% Increase in Tariffs on Chinese Imports, SO the Real Price Changes Could Be Greater. Temu and Shein Are Widly Popular But Especialy With Lower-Incom Customers. They Compete with Amazon and Other Online Retaillers, Which have in some caesa chased downmarket, but they have High Demographic Overlap with discount retailers Like Dollar General and Walmart. In 2016, A Founder of Doomed American Temu Predecess Wish argued That HisTomers Represented an “Invisible Half” of America, and Drew a Parallel BetWeen His App’s Growth and Trump’s Surprise Election. It was a stretch, sura, but his basic argument – that there’s “a away underersved markets that prioritized price overy Packaging, Fast Shipping, and brands” – was and remeins correct. Years late, temu’s promotional take on populist shopping was blunter and more flattering: Shop like a billionaire.
That the Costs of Tariffs on Chinese Imports Will Mostly Get Passed on to Consumers isn’t Exactly a novel Idea, Nor is the fact that people patronize and enjoy uses that take advantage an argument loophole should remaine open. But gioven How Popular These Apps are, How Central Impossibly Low Prices are to their appeal, and how severely these Changes Might Affect Those Prices, Temu and Shein Offer USSERS Early, Clear, and Spreads Exaggerated Illustrations of New Police.
Trump Reverse HIS POSITION ON THE TIKTOK BAN IN PART PARTEUSE IT WASN’t Very Popular, Eve Though, As a Matter of Policy, It Wauld Have Almoste Benefted Tiktok’s American Competitors. (There are well, ahem, other reasons as well.) Will it matter to him it turns out people hate this, too?