PDD Holdings — the parent company of Chinese e-commerce platform Temu — reported a 47% profit loss in the first quarter of 2025, as it's faced dwindling business in the U.S. driven by the ongoing trade war between the U.S. and China. 

According to BBC News, PDD chairman Chen Lei cited a "radical change in external policy environments" in an earnings report published on May 27, as tariffs from the Trump administration have threatened Temu's core business model in the United States. That started when President Trump ended duty-free exemptions for low-value packages out of China on May 2, subjecting Temu's shipments into the U.S. to a hefty 120% tariff. Although Trump cut those tariffs in half less than two weeks later, Temu has since stopped selling products directly from China to its American customers, instead limiting its sales in the country to goods shipped from U.S. warehouses. 

PDD's revenue for Q1 came in at 95.7 billion yuan ($13.3 billion), falling short of the 101.6 billion yuan projection from analysts earlier in the year. The company's 14.7 billion yuan net income for the quarter was also well shy of the 25.7 billion yuan analysts had initially forecast. 

In order to ensure that PDD's business remains stable and sustainable, Chen said that the company will have to adjust its business model in ways that "will likely weigh on our profitability in the short term, and even for a considerable period of time to come." That will include lower fees for its merchants to bolster its e-commerce business, and investments in local sourcing for Temu to guard against further instability from tariffs.