Tariffs have made Temu an economic experiment in real time: see how far their clients endure

Trump tariffs have turned Temu into an interesting behavioral economy laboratory. When the tariffs rose to 145%, the Chinese platform did something unheard of: Show exactly why prices uploadedbreaking down the price and explaining the origin of each extra charge.

Why is it important. This radical transparency avoided a total collapse. Although Daily users fell 58% and the GMV (gross merchandise value) was reduced by halfTemu managed to retain 40 million users when some predictions talked about a collapse.

Honesty over tariffs has transformed a debacle into a manageable crisis.

In detail. Temu’s strategy is brutally direct. Instead of hiding the increases, they explain: “Imported articles may be subject to import positions. These charges cover all customs -related processes and costs.”

A mobile cover went from $ 1 to $ 1.50. It looks like a rise of “only 50 cents”, but it is 50%. It is difficult to resist such a percentage increase. However, $ 1.50 remains a much lower price than American equivalents.

The context. Trump eliminated the exemption “of Minimis” which allowed shipments from China without tariffs for packages of less than $ 800. Initially it applied 145% tariffs, then reduced them to 54% for 90 days.

90% of Temu’s business depended on this model that took advantage of the legal lagoon. When it disappeared, the company had to reinvent itself.

Yes, but. The experiment has limits. Temu eliminated 3.4 million products from its catalogleaving only 150,000 sent by boat. 20% of vendors went to other platforms or markets. The company reduced its advertising expense in the United States and redirected resources to Europewhere his advertising investment has multiplied by twelve.

The partial resistance of consumers says a lot about price psychology. When Temu showed total transparency on tariffs, many buyers interpreted the increases as something external to the company, not as Temu’s greed. This perception of “we against the system” translated into an unexpected loyalty between the hard core of users.

• TeMU is transforming its business model on the fly. Launched the “Model Y2“That allows Chinese merchants to send directly without storing inventory in the United States.
• The “local to local” model is expanding where American sellers sell locally stored products.
• Its objective: that 80% European sales come from local vendors to avoid tariffs.

The big question. What does the US consumer say that 40 million remain willing to pay almost double for Chinese products? Trump wanted to kill Chinese electronic commerce, but has ended up airing the existence of a huge group of consumers for whom the equation-value equation of Chinese products is still irresistible. Even with 145%tariffs.

In Xataka | China has made a drastic decision and unpredictable consequences: prioritizing “its” technology, even worse

Outstanding image | Alain G. ShumbushoTemu

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Tariffs have made Temu an economic experiment in real time: see how far their clients endure

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Xataka

by
Javier Lacort

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