PDD Holdings, owner of budget e-commerce platform Temu, reported a steep profit decline in the latest quarter, partly due to President Donald Trump’s tariffs.
The Chinese company posted a 38% profit loss in the quarter that ended on March 31, compared to the year before. Its profits in the quarter totalled 16.09 billion yuan, or $2.22 billion.
PDD Holdings’ CEO, Lei Chen, said in a Tuesday earnings call that the profit decline was, first of all, due to intensifying competition in the e-commerce industry domestically in China. The company’s Pinduoduo platform, the domestic equivalent of Temu, faces tough competition from players like Alibaba’s Taobao and JD.com.
“And second, in our global business, radical change in external policy environment, such as tariffs, has created significant pressure for our merchants who often lack the capability to adapt quickly and effectively,” Chen said.
“Amid a rapidly changing external environment, our global business is working with merchants across the region to bring stable prices and abundant supply to consumers around the world,” he said.
While profits were down, PDD Holdings reported a 10% revenue increase compared to the year before, with $13.18 billion in sales.
The earnings results follow a difficult quarter for Temu, which was directly affected by Trump’s tariffs. On May 2, his administration closed the de minimis loophole, which allowed small parcels under $800 to enter the US for free, exposing Temu to tariffs and import fees.
Trump has been imposing tariffs on China since February, starting at 10%. At its peak, the tariff rate on goods from China was 145%. As trade negotiations continue between the two countries, Trump has temporarily reduced it to 30%.
Temu, a Gen Z-favorite app in the US, increased the prices of its products on April 25, citing “recent changes in global trade rules and tariffs.”
Chen added in the call, “No matter how policies shift, we’ll continue to strengthen our operations in the markets we serve, helping more local merchants grow on our platform and enabling more orders to be fulfilled from local warehouses.”
Representatives for PDD Holdings did not respond to a request for comment from Business Insider.
