Inside the Chinese Wholesale Market Where Temu and Shein Source From

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This is the Yiwu International Trade Market in China. With 75,000 stores spread across 1,500 acres, it is the world's largest wholesale market. If you have ever bought anything from Temu or Shein, there is a good chance it came from here.

However, the prices of these goods might be increasing after President Trump suspended a trade exemption that had significantly boosted Chinese e-commerce platforms. A little-known loophole had fueled a surge in low-cost Chinese goods making their way from Yiwu to the U.S. You can even buy bunting for U.S. election campaigns, but Trump's new tariffs may put an end to that.

Here’s why this market, the center of global wholesale trade, has now become a target of the U.S. government.

Yiwu International Trade Market

This massive bazaar is strategically located near China's east coast, close to major ports in Shanghai and Ningbo, which allows for easy trade with the U.S. Buyers for e-commerce platforms like Temu and Shein visit Yiwu to source cheap products in bulk and sell them to American consumers.

For instance, "Trump 2024" campaign hats are available here, complete with the signature hairstyle, all labeled "Made in China." These hats are sold wholesale in Yiwu for around a dollar each. The prices remained low for U.S. consumers because shipments were not subject to import taxes or tariffs.

De Minimis, Explained

This was possible due to a provision called "de minimis," which allows any shipment under $800 to enter the U.S. tariff-free, regardless of its origin. The U.S. has one of the highest de minimis thresholds in the world—about 50 times higher than Canada’s.

"The idea behind it," explains an expert, "was that if customs had to process and apply tariffs to every small package, it would overwhelm officials with unnecessary paperwork."

Chinese platforms like Shein and Temu built their business models around shipping tariff-free directly from Yiwu to U.S. consumers. In 2023, exports from Yiwu were valued at over $70 billion, with a significant portion reaching the U.S. About $54 billion worth of products were shipped to America under the de minimis provision, most of them originating from China.

However, the U.S. administration’s decision to end this duty-free allowance for Chinese imports could drive up prices for many products flowing from Yiwu to American customers. President Trump has announced new tariffs on Chinese goods, effectively removing the de minimis exemption.

Impact of the Tariff Changes

Trump stated, "That was just an opening salvo. If we can’t make a deal with China, the tariffs will be very, very substantial." The announcement led to widespread confusion, temporarily halting U.S. Postal Service acceptance of parcels from China before resuming later.

More than 1.3 billion packages entered the U.S. tariff-free under the de minimis provision in 2024, with Temu and Shein alone likely accounting for nearly a third of those shipments. The average order on Shein is around $70, meaning these parcels previously entered the U.S. without duties. With the exemption removed, such shipments will now be subject to import taxes, including an additional 10% tariff.

Under Trump's new order, small parcels from China will also face extra customs checks, leading to longer processing times. Talk of higher tariffs has sparked growing anxiety in Yiwu, as traders express concerns about the future of their businesses.

Chinese Company Shipments and Market Reactions

Critics argue that changes are necessary to prevent Chinese e-commerce platforms like Temu and Shein from flooding the U.S. market and undercutting domestic businesses. However, both companies insist that de minimis is not crucial to their success.

One trade expert explains, "This move is symbolic—it sends the message that the U.S. is cracking down on Chinese companies at all levels. But the wave of packages isn’t going to stop; it will just be routed differently."

Shipments from Yiwu have surged, and experts believe demand for cheap Chinese goods is not going away. "Why do we have so many packages?" one analyst asks. "Because so many American consumers are interested in purchasing these products from companies like Temu."

A new trade war between China and the U.S. is taking shape, with Beijing imposing its own retaliatory tariffs on some U.S. imports. However, if Trump maintains tighter trade restrictions on China, experts believe Chinese businesses will adapt rather than stop exporting.

"They will find alternative routes," an expert says. "So, rather than cutting off Chinese products from entering the U.S. market, these tariffs will primarily drive up costs for American consumers."