Temu, the ultra-discount international e-commerce platform, is facing intense backlash in Pakistan following a sudden and dramatic increase in product prices. What was quickly positioning itself as a go-to destination for price-sensitive shoppers across the country, Temu’s product listings have seen price hikes ranging from 50 to over 200% in a matter of days. The timing has coincided with the introduction of a new tax on foreign e-commerce purchases in Pakistan, but the magnitude of the increase has far outpaced what would be expected from a 5% levy.

Consumer frustration has mounted across social media platforms, where users have shared screenshots and side-by-side comparisons showing how formerly affordable goods have become prohibitively expensive. While the government’s new advance tax on international e-commerce transactions was intended to bring some parity between foreign and local platforms, the response from Temu appears to have undermined that goal in practice.

Industry observers point out that this situation reflects a deeper structural issue. According to individuals with knowledge of cross-border logistics, Temu had previously operated in Pakistan by aggressively exploiting gaps in enforcement mechanisms. The platform reportedly under-declared the value of imported packages to customs authorities, thereby avoiding duties and taxes that local sellers are obligated to pay. This allowed Temu to offer prices that no domestic player could match, even when factoring in shipping and delivery timelines.

For local sellers, this created a distorted competitive environment. While Pakistani sellers are subject to GST registration, customs duties, income tax compliance, and regulatory inspections, Temu was able to bypass many of these costs due to having no on-ground presence and a lack of effective enforcement infrastructure.

The new tax framework was designed, in part, to address this disparity. By taxing foreign e-commerce transactions at the source through banks and financial institutions, regulators aim to establish a more level playing field, ensuring that international platforms would no longer enjoy an unchecked cost advantage over local retailers. However, the implementation of this framework has proven to be inconsistent and, in Temu’s case, difficult to enforce comprehensively.

While the tax is now being deducted on transactions, platforms like Temu still operate outside many formal business channels. They are not locally incorporated, do not maintain physical operations or teams in Pakistan, and often have no direct accountability to domestic regulatory agencies. This makes it difficult to monitor whether foreign platforms are declaring goods at their correct value, collecting and remitting applicable taxes, or complying with consumer protection standards. In the United States, major retail brands such as GAP and Forever 21 have publicly accused Temu of distorting the competitive landscape. Executives from both companies have argued that platforms like Temu, which offer ultra-low prices without bearing the same operational or compliance burdens, have made it increasingly difficult for established players to maintain a viable presence.

Temu’s price hikes, rather than being a transparent pass-through of new taxes, have raised concerns that the platform is using the new regulatory environment as cover for abrupt commercial shifts. The fact that product prices rose steeply just as the new tax took effect, and without any public explanation from the company, has only deepened public scepticism.

In the absence of clear communication, users have interpreted the move as opportunistic. Promotional banners and app-based flash sales continue to advertise deep discounts and time-sensitive offers, yet many of the products now cost significantly more than they did weeks ago. This disconnect between marketing and pricing has created a perception of misleading conduct, further hitting consumer trust.

Temu’s experience in Pakistan is now becoming a cautionary case study in the difficulties of regulating global digital commerce in emerging markets. While the government is making efforts to enforce a more equitable tax and trade environment, the tools available for implementation remain limited and local sellers are left competing with one hand tied behind their backs.

The Temu episode also carries broader implications for consumer behaviour. Pakistani shoppers, already grappling with inflation and currency volatility, are increasingly wary of platforms that promise affordability but deliver unpredictability. For Temu, the situation presents both a reputational and operational challenge. If it seeks long-term viability in Pakistan, it will need to adapt to a changing regulatory landscape, engage more transparently with its users, and demonstrate that it is willing to compete fairly. Without these steps, the platform risks alienating not only its customer base but also the regulators and market forces that once allowed it to flourish.