• PDD Holdings reported a 47% drop in net profit for the first quarter amidst trade challenges.
• The company’s revenue for the quarter hit 95.67 billion yuan, missing analysts' expectations.
• Intensifying competition and changes in U.S. tariffs have significantly impacted profitability.

PDD Holdings, the Chinese e-commerce company and owner of the online platform Temu, reported a substantial 47% decline in net profit for the first quarter of 2025, totaling 14.74 billion yuan (approximately US$2.05 billion). This downturn is attributed to intensified competition within the domestic market and global trade uncertainties, particularly related to U.S. tariffs, according to SCMP, Reuters, and Channel News Asia.

The company noted a significant drop in U.S.-listed shares, falling by over 17% after the announcement. Despite attempts to boost sales through deep price cuts, a prolonged property crisis within China has further dampened consumer spending on their Pinduoduo platform, which faces fierce competition from other e-commerce giants such as Alibaba and JD.com, according to BBC, India Times, and Channel News Asia.

Analysts have suggested that the recent U.S. decision to end the "de minimis" tariff exemption—which allowed small packages valued under $800 to enter the U.S. without tariffs—has put further strain on Temu's business model, especially as it strives to maintain competitive pricing. The company’s chairman, Chen Lei, stated that these external factors have led to "significant pressure for our merchants," echoing sentiments shared across multiple reports, including India Times, Business Insider, and Reuters.

PDD Holdings also reported a revenue of 95.67 billion yuan for the quarter, falling short of analyst expectations of 102.51 billion yuan, marking a significant slowdown after previous growth rates. The company emphasized its commitment to long-term strategies despite the immediate drop in profitability, suggesting investments made to support merchants will ultimately prepare them for a challenging market landscape, as noted by Channel News Asia, India Times, and Business Insider.