Chen Lei, the company’s president, believes this is the result of US President Donald Trump’s trade policies.
Shares of US-listed Temu fell more than 13% this week. This was the result of the release of data that one of the largest e-commerce companies’ profits fell to 14.74 billion yuan (about $2 billion) in the first three months of the year.
The president of PDD Holdings believes that the drop in profits was the result of the trade war between the US and China, which “put significant pressure on customers”. In his opinion, the drop in profits was caused, in particular, by changes in customs tariffs.
Indeed, Temu and other Chinese trading platforms enjoyed tariff exemptions prior to the Trump administration’s announcement of new customs policies. This allowed low-value goods to be sold and shipped to the U.S. without having to pay import duties.
The imposition of 120% U.S. duties in early May came as a shock to Chinese e-commerce giants. In response, Temu said it would stop directly selling goods from China to U.S. customers.
Trade tensions between Washington and Beijing temporarily subsided after the two sides reached an agreement to suspend reciprocal measures for 90 days. This allowed duties to be reduced for that period to 30% on low-value shipments to the US. But it still doesn’t fundamentally solve the problem and could continue to put pressure on the e-commerce giant’s business from China.
The BBC piece notes that Chinese online retailers could face problems selling their goods to EU and UK customers as well. The EU has proposed a standing charge of two euros for each small parcel delivered directly to a customer’s home.
