PDD Holdings, the Chinese owner of online shopping platform Temu, has reported a near 50% drop in profit as US President Donald Trump’s trade policies added to its struggles in its home country.
US-listed shares of the e-commerce giant fell by more than 13% on Tuesday, after the firm said its profits for the first three months of the year fell to 14.74bn yuan ($2.05bn , £1.5bn).
Earlier this month, the Trump administration ended the so-called “de minimis” exemption that allowed parcels worth less than $800 (£593) enter the US without being hit with import duties.
In China, PDD has been locked in a long-running price war with rivals like Alibaba and JD.com in the face of weak consumer spending.
PDD Holdings reported a 47% drop in profit for the first quarter of the year. Its chairman, Chen Lei, said this was due to a “radical change in external policy environments such as tariffs”.
Mr Chen said the US-China trade war had also “created significant pressure for our merchants”.
Temu and rival Shein had previously relied on a duty-free treatment which allowed them to sell and ship low-value items directly to the US without having to pay import taxes.
This ended in early May, leaving Chinese e-commerce giants facing hefty US tariffs of 120%.
In response, Temu said it would stop selling goods from China directly to US customers.
But following a thaw in trade tensions between Washington and Beijing, the tariff rate on the small packages was slashed by over half for 90 days.
Temu and its rivals are also facing issues in Europe and the UK.
The EU proposed a two-euro flat fee on billions of small parcels sent directly to people’s homes. Online marketplaces would be expected to pay the new fee.
Last month, UK Chancellor Rachel Reeves announced that the government planned to review the customs treatment of low-value products entering the country following complaints from retailers.
