Temu, the Chinese-owned e-commerce platform that upended U.S. retail with a flood of ultra-cheap gadgets, sneakers, and household goods, has abruptly curbed shipments from China to the United States. The move comes as the Trump administration’s crackdown on the so-called “de minimis” tariff exemption for low-value imports takes effect, upending the cross-border business model on which Temu built its surging U.S. presence.

As of Friday, products shipped directly from China on Temu’s U.S. website and app—long a mainstay of the platform—now read “Out of Stock.” Temu has informed shoppers that all orders are fulfilled from U.S. warehouses, and is touting “no import charges” or surprise fees for domestic goods.

Temu’s rapid pivot comes in reaction to new tariffs and regulatory changes. The de minimis provision, in place since 2016, had allowed goods valued at $800 or less to be imported into the U.S. duty-free if shipped directly to consumers. That exemption, which facilitated the rise of cut-rate Chinese marketplaces such as Temu and fast-fashion rival Shein, expired at 12:01 a.m. Eastern on Friday, following an executive order signed by President Donald Trump in April.

Hours before the deadline, Temu began imposing steep “import charges”—as high as 150% of a product’s value—on goods shipped from China, in a move seen by industry analysts as a stopgap effort to pass new duties on to U.S. consumers. The surcharges quickly rendered many of Temu’s hallmark bargains unaffordable, sometimes exceeding the cost of the item itself.

Now, in what analysts say is an existential test for Temu’s U.S. ambitions, the marketplace has suspended direct cross-border listings and is pushing U.S.-based inventory instead. A spokesperson for Temu told CNBC that “all sales in the U.S. are now handled by local sellers and fulfilled from within the country,” adding, “pricing for U.S. shoppers remains unchanged.”

“Temu has been actively recruiting U.S. sellers to join the platform,” the spokesperson said. “The move is designed to help local merchants reach more customers and grow their businesses.”

Tariffs and the End of the Bargain Bonanza

The reversal is the latest fallout from mounting trade tensions between Washington and Beijing. In addition to ending the de minimis classification for China and Hong Kong, the Trump administration has imposed new tariffs of 120% to 145% on a range of Chinese imports, including goods that had previously been exempt as “low value.” The tariffs come as part of what officials describe as a bid to address unfair trade practices and bolster domestic industry.

Temu, owned by Nasdaq-listed PDD Holdings, made a splash in 2022 as the go-to destination for Americans seeking $5 sneakers, $1.50 garlic presses, and a dizzying array of household items—prices made possible by direct shipping from Chinese factories and a regulatory loophole that allowed the parcels to arrive duty-free. The platform’s U.S. sales are estimated to hit $50 billion this year, up from $17 billion in 2023, according to third-party analysis.

“For years, companies like Temu and Shein built their U.S. empires with the help of de minimis,” said Craig Allen, president of the U.S.-China Business Council. “The closure of that loophole fundamentally changes their cost structure and the choices available to American consumers.”

Industry-Wide Shakeout

Temu is hardly alone in facing new headwinds. Rival Shein has also warned shoppers that tariffs are now included in the price they pay, displaying a prominent banner at checkout: “Tariffs are included in the price you pay. You’ll never have to pay extra at delivery.” Amazon, which sources some products directly from Chinese manufacturers under its “Amazon Haul” program, considered making import fees visible to U.S. customers, but ultimately scrapped the plan as de minimis came to an end.

Opponents of the now-defunct provision, including some U.S. manufacturers and lawmakers, have long argued that the policy put domestic businesses at a disadvantage and facilitated shipments of illicit substances by minimizing customs scrutiny. The Biden administration also considered curbing the rule during its first term, though stepped back from aggressive action at the time.

A New, Domestic Playbook

As Temu scrambles to reorient its distribution, much depends on the company’s ability to cultivate a robust network of U.S. inventory—and to persuade domestic merchants to sign on as sellers. Industry observers say Temu began building up local warehousing last year in anticipation of regulatory turbulence. Still, it remains unclear whether the company’s promise of “unchanged” pricing can hold as it is forced to source products locally or import them in bulk—both at much higher cost.

“Our goal is to continue offering value and convenience to U.S. shoppers,” Temu said in a statement. Privately, people familiar with the company’s operations acknowledged that the changes may mean higher prices and slimmer selection, at least in the near term.

Shares of PDD Holdings rose 2.7% in pre-market trading Friday, reflecting cautious optimism—or relief—that the company had a contingency plan in place. But the dramatic shift underscores how vulnerable e-commerce disruptors can be to the shifting sands of global trade policy.

As the tariff tide rises, Temu’s experience offers an early look at how the U.S.-China retail relationship may be reshaped for years to come. The age of $3 gadgets shipped from Guangzhou to Grand Rapids in days, critics and analysts agree, is likely over.