Report: Temu Loses 58% of US Daily Users Due to Tariffs

Core Insights - Temu experienced a significant decline in daily U.S. users, losing 58% in May following the end of the de minimis exemption on imported goods from China on May 2 [1] - The new tariffs have led to a sharp drop in both sales growth and customer growth for Temu, as reported by Bain & Company [1] - Temu's parent company, PDD Holdings, reported a 38% year-over-year decline in profits in the first quarter due to tariffs and other factors [5] Impact of Tariffs - The de minimis exemption allowed packages worth less than $800 to enter the U.S. without tariffs, which was beneficial for Chinese eCommerce retailers like Temu [2] - President Trump announced additional tariffs on imports from China on February 1, aiming to halt illegal drug importation [2] - In response to the new tariffs, Temu is overhauling its supply chain by implementing a "half-custody" policy, which is expected to lead to higher prices [3] Changes in Operations - More than one-third of Temu's products sold in the U.S. are now fulfilled with inventory maintained in the U.S. [4] - Temu has raised prices and increased efforts to sell in countries other than the U.S. to mitigate the impact of tariffs [4] - The company significantly reduced paid advertising in the U.S., resulting in an 80% downturn in paid search traffic, which may further destabilize its pricing models [5] Merchant Challenges - PDD Holdings Chairman Lei Chen stated that tariffs have created significant pressure for merchants, who often struggle to adapt quickly and effectively [6]