Temu’s Parent Company PDD Holdings Suffers Major Profit Drop Amid Tariff Pressures
Chinese e-commerce giant PDD Holdings, the parent company of discount shopping platform Temu, has reported a sharp decline in profits as trade tensions with the United States and increased competition in China take their toll.
The company revealed that its profits for the first quarter of 2025 plummeted by 47%, falling to 14.74 billion yuan (approximately $2.05 billion or £1.5 billion). The announcement triggered a sharp market reaction, with PDD’s US-listed shares dropping more than 13% on Tuesday.
Chairman Chen Lei attributed the downturn to “a radical change in external policy environments such as tariffs,” noting that the ongoing US-China trade conflict had intensified the burden on its merchants.
The setback comes after the US government scrapped the long-standing “de minimis” exemption earlier this month. The rule had previously allowed goods valued under $800 (£593) to enter the US without import duties—a policy that platforms like Temu and Shein relied on to ship low-cost items directly to American consumers. With the exemption lifted, Chinese e-commerce firms now face tariffs as high as 120% on such items.
In response, Temu announced it would halt direct shipments from China to US buyers. However, following a temporary easing of tensions between Beijing and Washington, the tariff rate on low-value packages was reduced by more than half for a 90-day period.
Beyond the US, PDD Holdings is also navigating fresh regulatory challenges in Europe and the UK. The European Union is considering a €2 flat customs fee on small parcels shipped directly to consumers, which would apply to online marketplaces. Meanwhile, UK Chancellor Rachel Reeves has announced a planned review of customs rules for low-cost imports, following complaints from local retailers about unfair competition.
At home in China, PDD continues to face a tough market landscape marked by weak consumer spending and fierce pricing battles with domestic rivals such as Alibaba and JD.com.
PDD’s earnings report underscores the increasing vulnerability of Chinese e-commerce platforms to global regulatory shifts and trade policy uncertainties.
