VTEX's Mariano Gomide de Faria: geopolitical complexities limit Temu’s options as tariffs loom large

A wave of viral TikToks are showing US shoppers how to dodge President Trump's 145% China tariffs, by buying "cheap" Nike, Chanel, and lululemon direct from Chinese factories. Influencers claim they're exposing brand markups and factory secrets, offering lookalike goods for a fraction of retail prices.   

But brands aren't having it. lululemon and adidas are firing back, warning of counterfeits and distancing themselves from these suppliers. With factories flaunting supposed insider access and US, and China trade tensions escalating, the battle between authenticity, affordability, and authority is heating up, observes Mariano Gomide de Faria, Co-Founder, VTEX, a composable commerce platform currently used by the likes of Nestle, Coca-Cola, and Walmart.

Temu’s initial advantage is evolving

Temu’s cross-border model initially thrived on low cost exports and tariff loopholes, particularly the de minimis provision (allowing duty free imports under $800).

While this is still a major part of its business overall, this advantage is rapidly evolving. Temu has been reducing reliance on shipping individual low value items directly from China, increasingly shifting operations towards US-based fulfillment centres, similar to Amazon's logistics strategy.

Recent months indicate clear strategic shifts, as Temu actively discourages consumers from purchasing single, low priced items directly from China, meaning the company relies less on the de minimus provision.

Tariffs are prompting strategic adjustments

Retailers impacted by evolving US tariffs are diversifying their supply chains, optimising fulfillment logistics, and developing localised inventory strategies. Temu, despite establishing a foothold initially through the de minimis loophole, now appears better positioned than some US competitors who also have deep supply chain ties directly to Chinese manufacturers.

This is because Temu can source products cheaper than those retailers overall. Nevertheless, ongoing policy changes will undoubtedly pressure it to adapt further, potentially exploring alternative manufacturers based in countries with lower tariffs.

Geopolitical complexities limit Temu’s options

While expanding US-based infrastructure such as warehouses or fulfillment centres logically mitigates tariff risks, this strategy presents significant geopolitical challenges.

US regulatory scrutiny continues to intensify around Chinese owned platforms expanding operational footprints domestically. Concurrently, Chinese regulators might resist efforts by national tech champions like Temu to offshore strategic capabilities.

Tariffs remain a persistent challenge

However, even with increasing US fulfillment capacity, approximately 95% of Temu's products continue originating from China. Tariffs remain applicable regardless of domestic warehousing; thus, Temu must inevitably navigate tariff obligations.

To mitigate costs, it will likely reroute products through countries offering favourable tariff conditions (around the current 10% threshold), such as Mexico, Brazil, and countries in South Asia, before reaching the final US destination.