Chinese e-commerce powerhouse PDD Holdings, the parent company of budget shopping platform Temu, reported a sharp 47% plunge in net profit for the first quarter of 2025, as rising trade tensions with the United States weigh heavily on the firm’s business model.
In its latest earnings report, the Shanghai-based company announced a net profit of 14.7 billion yuan ($2 billion) for the three months ending March 31, nearly half of what it recorded during the same period last year.
The steep decline comes as China and the U.S. navigate renewed trade hostilities. In a significant policy shift last month, U.S. President Donald Trump scrapped a longstanding customs exemption for imports under $800, a mechanism that had enabled platforms like Temu to offer ultra-low-cost goods directly to American consumers with minimal tariffs.
In response to the challenging environment, PDD Holdings said it had made “substantial investments” to support both merchants and consumers. Co-CEO Lei Chen acknowledged that these efforts had taken a toll on profitability but were essential for “strengthening the platform’s long-term health.”
Despite the drop in profit, PDD reported a 10% year-on-year increase in revenue for the first quarter, totaling 95.7 billion yuan. However, this marks the fourth consecutive quarter of slowing growth, a significant drop from the 131% surge posted in early 2024 and down from 24% in the previous quarter.
Vice President of Finance Jun Liu described the slowdown as “expected” but said it had been “accelerated by the changes in the external environment.” She cautioned that financial results could continue to reflect the cost of ongoing strategic investments through these uncertain times.
Investor confidence also took a hit, with PDD’s New York-listed depository receipts falling over 13% following the earnings release.
In a further blow to Chinese exporters, President Trump this month issued a new executive order as part of ongoing tariff negotiations. The order imposes a 54% duty, or a flat $100 fee, on low-value goods shipped through the U.S. Postal Service, replacing a previous 120% tariff, but eliminating the zero-duty threshold that Temu and similar platforms had relied on.
As tensions continue to simmer, analysts warn that more turbulence could lie ahead for Chinese tech firms deeply tied to U.S. consumer markets.
Written By Rodney Mbua
