Chinese e-commerce powerhouse PDD Holdings, the parent company of the popular discount shopping app Temu, has reported a staggering 47% plunge in net profit for the first quarter of 2025, signaling growing pressure from escalating U.S.-China trade tensions.
The Shanghai-based firm revealed that its net profit for the three months ending March 31 dropped to 14.7 billion yuan ($2 billion), almost halving from the same period last year. This significant decline comes as the firm braces for further fallout from a looming trade war, worsened by a recent move from U.S. President Donald Trump.
Last month, the U.S. government scrapped the “de minimis” rule that had allowed duty-free entry for foreign goods valued under $800 a loophole heavily used by platforms like Temu to deliver low-cost products directly to American consumers. Under a new executive order, items shipped through the U.S. Postal Service will now be subject to a 54% tariff or a $100 payment, severely impacting PDD’s cross-border e-commerce model.
Despite the setback, PDD’s co-CEO Lei Chen emphasized that the company had made “substantial investments” to support merchants and customers amid “rapid changes in the external environment.” He acknowledged that these investments hurt short-term profitability but maintained they were essential for the platform’s long-term resilience.
Revenue growth, too, showed signs of cooling. PDD reported a 10% year-on-year increase to 95.7 billion yuan, significantly lower than the 24% growth seen in the previous quarter and a far cry from the explosive 131% surge at the start of 2024.
Jun Liu, PDD’s vice president of finance, noted that the slowdown was expected, though exacerbated by shifting global trade policies. She warned that the company’s financials may continue to feel the strain of sustained investments in an increasingly uncertain environment.
Investors responded swiftly, with PDD’s New York-listed shares tumbling more than 13% following the earnings release. As geopolitical tensions continue to weigh on global markets, the e-commerce giant faces mounting challenges in maintaining its international growth trajectory.
