Yes, ĉiu does mean everybody, but it also means every one of this noun here. In this instance the noun is rimedo. If the noun is a specific something (ĉiuj la porkoj manĝis ĉiujn la karotojn, for an instance) the correlative ends in ~u. If the noun is not specific, or specified (Mi ŝatus koni ĉion) then it gets the ~o ending.
Ho, wait, -u is the suffix for individual things. So "tiu libro" is "that individual book", or just "that book", because English doesn't differentiate those. If a noun is omitted, it becomes "that individual", and "person" is added. So "tiu" without a noun is actually "tiu homo" (that specific person).
In this sentence, we have a noun (rimedo), so the "tiu" refers to that.