Unforeseen Consequences of the Dominimus Loophole

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The Dominimus loophole has led to a massive influx of packages from Asian countries, mainly China, overwhelming the system and evading taxes and customs inspections. This exemption, designed before e-commerce, has put pressure on customs and border protection as they struggle to handle individual packages. Consequently, various unsafe items, knockoffs, products from forced labor, and even fentanyl-related chemicals have been entering the US unnoticed. A proposed bill aims to mitigate this flood of unregulated packages.

It is rare that a new e-commerce company has such a meteoric rise as Temu. The company, which launched in the fall of 2022, has been flooding the American advertising market, buying much of the inventory of Facebook, Snapchat, and beyond. According to the market intelligence firm Sensor Tower, Temu is one of the most downloaded iPhone apps in the country, with around 50 million monthly active users.

On today's show, we go deep on Temu: How does it work, how did it manage such a quick rise in the U.S., and what hints might it offer us about the future of retail? Plus, we'll talk to the bicycle-loving U.S. Representative who is working to shut down a loophole that has proved very helpful to Temu's swift ascent.

This episode was hosted by Nick Fountain and Alexi Horowitz-Ghazi with reporting from Emily Feng. It was produced by Sam Yellowhorse Kesler and Emma Peaslee. It was edited by Keith Romer, fact-checked by Sierra Juarez, and engineered by Cena Loffredo. Alex Goldmark is Planet Money's executive producer.

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