Temu’s Q1 Profit Plunge Amid US-China Trade Tensions

Temu’s first-quarter net profit plummeted 47% to $2.46 billion as US-China trade frictions escalated. The e-commerce platform’s US-listed shares tumbled 13% following the earnings disclosure, revealing its weakest growth since early 2022 despite a 10% revenue increase.

The TRUMP administration’s elimination of duty-free exemptions for low-value parcels dealt a significant blow to Temu and rival Shein, whose business models relied heavily on the tax advantage. PDD Holdings, Temu’s parent company, now faces tough decisions about its US expansion plans as American consumers become increasingly price-sensitive.

April’s price hikes on the Temu platform and May’s termination of the $800 de minimis threshold for Chinese imports have created headwinds for the once-high-flying shopping platform. These developments come after Temu recorded explosive 131% revenue growth earlier in 2024.