The Chinese e-commerce company PDD Holdings which operates Temu experienced a 47% decrease in first-quarter profits because of new U.S. tariffs and domestic market competition. The company recorded $2.05 billion in net income while its stock price declined by more than 13%.
The Trump administration terminated the “de minimis” rule which previously enabled duty-free U.S. package imports under $800. The policy change resulted in 120% tariffs for Temu which forced the company to stop shipping products directly from China.
The external policy environment underwent a fundamental transformation according to Chairman Chen Lei. The Chinese market faces a price competition between PDD and Alibaba and JD.com because consumers show limited purchasing power. The company must prepare for upcoming EU and UK regulatory actions that aim to restrict affordable imported goods.
The fast growth of Temu in U.S. and European markets faces challenges because of changing global e-commerce patterns caused by geopolitical developments.
