The Trump administration has recently taken significant steps to eliminate the de minimis trade exemption, a policy that previously allowed low-cost imports to enter the United States without incurring tariffs. This decision has raised concerns for Temu, a Chinese e-commerce platform that has thrived on providing ultra-cheap goods to American consumers. In response to these regulatory changes, some sellers on Temu have resorted to deceptive practices to maintain their profit margins, including the use of counterfeit shipping labels to evade legitimate shipping costs.
According to a report by Rest of World, Chinese sellers on Temu have found a way to reduce their shipping expenses to nearly zero by using fake postage labels that deceive the United States Postal Service (USPS). These fraudulent labels can be purchased for as little as 60 cents on Chinese social media platforms, whereas legitimate shipping typically costs between $4 and $10. By exploiting this loophole, sellers can significantly cut their expenses while the USPS, ultimately funded by American taxpayers, absorbs the financial burden.
The process involves vendors purchasing these counterfeit labels and sending them to small warehouse operators in the U.S. willing to take on the legal risks. These warehouses print and attach the fake labels before dropping off the packages at USPS locations. The postal system’s inability to verify every label in real time allows these packages to be delivered without detection, resulting in substantial losses for the USPS.
Temu’s business model relies on extremely low prices, attracting millions of American shoppers—up to 185 million each month. However, many sellers have admitted that they cannot remain profitable without engaging in these dishonest practices. One seller reportedly buys between 1,000 and 2,000 fake labels daily, achieving shipping cost reductions of over 90 percent.
The pressure to compete in Temu’s aggressively priced marketplace has made illegal methods like counterfeit shipping increasingly appealing. As the platform continues to grow, questions arise about how a Chinese-owned company can reshape American consumer habits while exploiting regulatory gaps.
In early 2025, when the Trump administration temporarily revoked the de minimis trade exemption, some Chinese merchants opted to store their goods in U.S. warehouses to avoid customs scrutiny. However, others turned to outright fraud to sustain their profit margins. The real victims of this scheme are American taxpayers, who bear the financial losses incurred by the USPS, as well as legitimate American businesses that struggle to compete against sellers who exploit loopholes for artificially low prices.
USPS employees have reported encountering suspicious shipping labels but often lack the resources to investigate each case thoroughly. In New York City, for instance, postal workers have observed fake labels, yet the packages continue to be processed for delivery. Investigators have described the scale of losses due to this fraud as “astronomical.”
To combat this issue, the U.S. Postal Inspection Service has begun intercepting packages with counterfeit labels at major ports, including New York and Los Angeles. In a notable case, a California logistics operator pleaded guilty to defrauding the USPS out of $150 million through the use of fake postage and now faces a potential ten-year prison sentence. Despite these enforcement efforts, the vast scale of the fraud makes it challenging to contain.
Beyond the shipping fraud, Temu poses broader economic and security concerns for the United States. The platform operates in a manner that raises alarms about compliance with U.S. import tariffs, labor laws, and user data privacy. A report by the Center for Strategic and International Studies highlights that Temu collects user data beyond what is necessary for e-commerce, with its parent company, PDD Holdings, having documented ties to Chinese state-controlled entities. Under China’s National Intelligence Law, Temu is obligated to provide data to Chinese authorities upon request, raising fears that American consumer data could be weaponized for surveillance or influence campaigns.
Temu’s exploitative practices reflect a larger strategy by Chinese firms to dominate global e-commerce while amassing extensive data. Similar to TikTok, Temu represents another front in China’s strategic competition with the U.S., leveraging economic infiltration for both financial and informational advantages. The pressing question remains: how long can the U.S. afford to overlook the implications of Temu’s operations?