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As Temu remains at the number one spot for top free apps in the Google Play and App Store, the app faces more scrutiny from consumers and lawmakers alike. Younger buyers take to TikTok to post Temu hauls and to find cheaper duplicates of popular items they may not be able to afford.
Also: Is Temu legit? What to know about this shopping app before you place an order
For consumers on a tight budget, Temu’s ridiculously low prices can be a tempting, affordable option. But how and why is everything Temu sells so cheap? The answer lies in a loophole in US trade rules.
According to a report from the US House Select Committee on the Chinese Communist Party, Temu relies on the de minimis exception to ship goods directly to US customers for a low price. A shipment below the de minimis value of $800 isn’t inspected or taxed by US Customs.
Temu and another Chinese-owned e-commerce platform, Shein, are responsible for around 600,000 (about 30%) of all packages shipped below the de minimis value to the US every day. As a result, each shipment evades taxes and inspections from US Customs and Border Patrol.
Also: I tried 4 tech products from Temu. Here’s how it went
The US’ de minimis threshold is more than double the threshold of any other country except Bahrain and Kazakhstan, and some lawmakers believe the provision is being abused.
US Senators J.D. Vance and Tammy Baldwin introduced a bipartisan bill to amend the de minimis provision and lower it, but the amended provision would apply only to China, Russia, and any other countries the US government sees fit.
The Select Committee’s report says that these companies rely on the de minimis provision to sustain their business model. However, by relying on the de minimis provision, Temu can evade compliance with the Uyghur Forced Labor Prevention Act (UFLPA) and other laws against forced labor.
Also: I bought some off-brand geeky stuff from Temu (and wasn’t mad about it)
According to the Select Committee, The Chinese Communist Party, the ruling political party in China, has subjected the Uyghurs, a minority ethnic group in China, to forced labor practices.
As a result, the US is trying to minimize the importation of Chinese products made from forced Uyghur labor. Thus, the UFLPA prohibits shipping products into the country that the US government believes were made by Uyghurs.
Yet, products shipped under the de minimis provision allow Temu to provide insufficient data to US Customs and avoid UFLPA compliance.
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According to the report, US Customs and Border Patrol approved more than 685 million de minimis packages in 2022, leaving the government unable to confidently determine whether Temu and Shein complied with the UFLPA.
Temu told the Committee that the company does not have an internal or external entity to ensure sellers comply with Temu’s Code of Conduct. The report also concluded that Temu has no compliance measures to ensure UFLPA compliance and that the company relies on sellers and consumers to report any suspicion of items made from forced labor.
Temu says that its products are so affordable because the company allows buyers and sellers to connect directly, cutting out the added expenses associated with a middleman. That may be only a partial explanation, however, as the de minimis provision and questionable product sources also contribute to lower prices.
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