U.S. consumers are decreasing their patronage at online marketplace Temu
From the troubled waters of Temu's popularity it seems the online marketplace is facing a significant setback, especially in the U.S., as reported by Reuters. A whopping 48% drop in customers was observed in May 2025 compared to March of the same year. This downward spiral can be attributed to the Trump administration's decision to scrap duty-free imports of Chinese goods into the U.S.
With increased tariffs on imports from China, Temu faced a brick wall in the American market. To compensate, PDD Holdings, Temu's parent company, decided to sell only products already stored in U.S. warehouses, but the heavier tax burden and rising complaints about the platform's disappointing product quality have left many Americans cooling off to this marketplace.
In a bid to attract more buyers, Temu beefed up its advertising budget in Europe significantly. In the UK, the ad spend jumped by 20% year-on-year in April 2025, while in France it surged by 115%. Despite the substantially boosted advertising budgets, the new customers remained elusive. To add salt to the wound, the number of Temu buyers in the UK increased by only 10% throughout the entire year.
Kazakhstani consumers have also shown some discontent. They are inundated with aggressive advertising and constant notifications about promotions and discounts, and are struggling with returning or exchanging defective products from China. This issue was vocally raised by the Minister of Trade and Integration, Arman Shakkaliyev, who highlighted that foreign marketplaces and sellers operate beyond Kazakhstan's jurisdiction, putting consumers at risk.
Another sticking point is that Kazakhstan has a law allowing duty-free import of small parcels valued up to $200. This loophole allows Chinese marketplaces like Temu to dodge customs duties and pay less VAT, placing domestic businesses at a disadvantage. This was openly acknowledged by deputy Azat Peruashev, but the issue remains unresolved to this day.
In essence, Temu's struggles in the U.S. stem from the elimination of the tariff exemption that previously made its low-cost model sustainable, resulting in a massive loss of users and sales. Meanwhile, customers in the UK and Kazakhstan have expressed concerns over product quality, delivery reliability, and service authenticity, posing challenges to Temu's global reputation.
The heavy tax burden and dwindling customer trust due to product quality concerns led PDD Holdings to seek new opportunities in the European retail industry, intensifying their advertising efforts in countries like the UK and France. However, these efforts yielded only modest results, with new buyers remaining scarce.
The regulatory landscape in Kazakhstan, particularly the duty-free import loophole for small parcels, has become a point of contention, putting domestic businesses at a disadvantage and casting a shadow on Temu's legitimacy in the region.
