Temu owner sees profits drop off the back of US tariff troubles

The online marketplace has seen exponential growth in recent years, but it recorded a 47% decline in profits in the first quarter to May 27.

Profits fell from nearly 28bn yuan (£2.8bn) to 14.74bn yuan (£1.5bn) year on year, while total revenues reached 95.67 yuan (£9.8bn), up 10%.

PDD chairman Chen Lei said the profit drop was due to “radical change in external policy environments such as tariffs”.

He added that the US-China trade war also “created significant pressure for our merchants”.

The “de minimis” rule was also scrapped this month. The rule used to allow parcels worth less than $800 (£593) to enter the US without added import duties, which was a benefit for marketplaces like Temu and Shein who offer cheaper goods.

Since then, these Chinese online retailers have been facing US tariffs between 54% and 120%, with Temu announcing that it would stop selling goods from China directly to US customers.

Temu and fellow rivals also face paying a new fee introduced by the EU. It proposes a two-euro fee on billions of small parcels sent directly to customers’ homes.

In the UK, Chancellor Rachel Reeves also announced that the government planned to review how low-value products enter the country.

On the results, Lei added: “In the first quarter, we made substantial investments in our platform ecosystem to support merchants and consumers amid rapid changes in the external environment.

“These investments weighed on short-term profitability but gave merchants the room to adapt and focus on high-quality, sustainable growth, strengthening the long-term health of the platform.”