PDD Holdings, the corporate umbrella for China’s online retail platform Temu, has unveiled a sharp downturn in its financial health, posting a 47% drop in earnings during the 2025’s initial quarter. This depressing fiscal scenario has been primarily instigated by the ongoing US-China economic conflict, which has inflicted a significant blow to their American operations and market presence.
Chairman of PDD, Chen Lei, pointed out a ‘swift transition in external policy landscapes’ in the earnings declaration disclosed on May 27. The repercussions of tariffs, imposed by the Trump administration, have started to besiege Temu’s pivotal business tactics in the US. This shift took place soon after President Trump suspended the duty-free provisions for marginal-value parcels originating from China on May 2, propelling Temu’s US-bound consignments into an unwelcoming zone of stifling 120% tariff.
Just under a fortnight later, President Trump curtailed the aforesaid tariffs by half. Regardless of this action, Temu took a strategic business decision of ceasing the direct selling of products from China to its customers in the United States. Instead, it elected to confine its US sales to merchandise dispatched from American warehouses.
The financial figures for PDD’s first quarter were disappointing, with a revenue score of 95.7 billion yuan ($13.3 billion). Analyst predictions had set the bar higher at 101.6 billion yuan earlier in 2025. PDD’s performance took a hit, unable to match up to these projected figures.
A similar scenario was echoed in the net income sphere as well. The company could only muster 14.7 billion yuan in net earnings for the inaugural quarter, falling considerably short of the anticipated 25.7 billion yuan as estimated by market analysts beforehand.
Mr. Chen recognizes the necessity of tweaking PDD’s business strategy to help maintain consistent and sustainable operations. He suggests that these alterations ‘may impose a burden on our profits in the near future and potentially for a significant duration ahead.’
A part of this new approach envisages a relaxation in charges for their traders to breathe life into their e-commerce segment. Further, to inoculate against potential tariff-induced unpredictability, investments will be channelized into local sourcing for the Temu platform.