Avoid the tariffs (sales tax) and buy directly from a Chinese merchant(s) TEMU.
As reported by Wired, the reason why Temu products are so cheap is because they are unbranded, mass-produced products from manufacturers across China. While products listed on the website might flaunt specific brand names in descriptions, the chances are very high that they will just be knock-offs. In fact, they are creating so many knock-offs and cheaply-made generic items that these manufacturers are allegedly being forced to cut prices in order to make them in the first place. One manufacturer told Wired that they often are working for nothing, which reflects in the price of the product. Not only does this ensure that lower-quality products than advertised as being sold, but it also means that those who make them likely aren’t being paid enough, if at all.
Many of the products avoid paying the tariffs through a loophole.
Shein and Temu, the ultra-cheap, ultra-fast retail giants, could be facing a new reality under rules proposed by the White House on Friday.
These companies have become huge sellers of clothes and home goods shipped from China to the U.S. And both online retailers have been operating differently from most other big retailers, using a tax loophole that’s saved them millions of dollars on import fees.
Instead of bringing large shipments into U.S. warehouses in bulk, Shein and Temu ship small individual orders directly to American shoppers. That means those packages can legally skip import taxes because U.S. law exempts shipments under $800 from import tax.
Amazon was not so different. I remember when they first started selling products, people did not have to pay a sales tax.
Amazon took advantage of tax laws that allowed online retailers to avoid collecting sales tax to create a pricing advantage. Now, Temu has a pricing advantage created by not paying customs duties and/or taxes.
Amazon didn’t have to collect sales tax because it sold in most states without physical presence, also known as “nexus.” Any retailer was obliged to collect from shoppers only if it had a substantial physical presence in their state. This principle was established by the Quill Corp. v. North Dakota case in 1992. In an interview with Fast Company in 1996, Jeff Bezos explained why he incorporated Amazon in Washington: “It had to be a small state. In the mail-order business, you have to charge sales tax to customers who live in any state where you have a business presence. It made no sense for us to be in California or New York.”
Without having to charge sales tax, Amazon could offer lower prices than local retailers that couldn’t evade it. Amazon kept that advantage for decades, and it was instrumental in making people shop online — goods were often cheaper. Other online retailers, of course, also benefited from the same conditions.
Then, over many years, court cases, proposed laws, and changes, Amazon went from collecting no sales tax to collecting it in its growing nexus states (it was by then in many of them due to building warehouses), to all states and, finally, for its third-party sellers. Today, everything sold on Amazon is charged sales tax in the U.S.
By the time Amazon couldn’t evade charging sales tax anymore, it had grown big enough that it didn’t need to rely on the loophole. It went from fighting states to avoid tax collecting to lobbying for it. Products lost some price advantage, but Amazon didn’t lose shoppers it spent years courting.
