Temu launched a fully subsidized “tax package” policy in Canada at the end of June 2025, covering GST, HST, PST and special tax rates in Quebec, and the profits of merchants will not be affected. This policy aims to help merchants reduce costs and improve pricing advantages and is suitable for high-priced goods.
Merchants can expand the market through local warehouses or US warehouses. Currently, Temu has 3.2 million daily active users in Canada, and the market potential is huge. It is expected that the scale of e-commerce will reach US$72.15 billion in 2025.
Temu’s “full tax package” policy in Canada is like a mixed bag of “reassurance pills + depth bombs” for the Canadian e-commerce market, which stabilizes consumers while giving competitors a blow. True “money-throwing” subsidies, consumers go on a carnival ride Temu launched the first “tax-inclusive” subsidy for the Canadian market at the end of June 2025, covering federal GST, provincial HST, PST, and even Quebec’s special tax rate. The subsidy amount has no upper limit on categories and order amounts. All taxes and fees are paid by the platform, and consumers can directly deduct them on the payment page. The price is directly reduced without discounts, and there is no threshold for placing orders.
The desire to place an order is instantly increased, and the e-commerce battlefield is once again in the spotlight Taxes are often the “magic potion” of the last mile of e-commerce platforms. Buyers will give up on products when they see the price jump when they check out.
Temu’s tax-inclusive trick is equivalent to adding a “tax-free plug-in” to all products. Its price advantage directly kills local e-commerce giants – they can only sigh at the price, and market competition instantly heats up. Local sellers must either band together or be forced to quit.
For cross-border merchants who want to “win without doing anything”, this wave of bonuses is sweet: profits are not affected, and they can also show their presence at extremely low prices. But for small and medium-sized sellers in Canada, the pressure is huge – either they are forced to cut prices to compete, or they actively join Temu’s local recruitment plan (which was just launched a while ago) to accelerate inventory localization, otherwise they will be “crushed” at any time (Retail Insider)4. Supply chain landscape reshuffled, logistics fulfillment becomes the key Tax inclusion is just a gimmick. Whoever can polish a faster “instant delivery + accurate delivery” logistics experience during the subsidy bonus period will be able to retain repeat customers.
With Temu’s move, competitors will have to speed up the expansion of local warehouses and same-city delivery in Canada. In the end, consumers will enjoy tax-free prices while considering who can deliver faster and more steadily. Government tax pressure and regulatory attention are a double-edged sword the tax package makes consumers happy, but the tax revenue of the Canadian federal government and provinces is “empty-handed” because of the subsidies. Although Temu is paying for itself, in the long run, the fiscal budget and cross-border e-commerce supervision will also keep up, such as stricter local inventory review and stricter import quota control. The entire industry must dance to the rhythm of the policy.
In the long run: Platform strategy + ecological innovation is the way to go how long can this “tax-inclusive feast” last? In the short term, it can at least attract traffic and hot products, but if you want to really win, it depends on who can find differentiation in the price war – whether it is the connection of local life services, social e-commerce gameplay, or precise subsidy strategies based on big data, these are the long-term magic weapons to retain users.
In short, Temu’s “full tax package” is not only a traffic bomb, but also a “restart button” for the entire Canadian e-commerce track: consumers cheer, sellers practice hard, and platforms and governments test each other.