Chinese e-commerce giant PDD Holdings reported a nearly twofold decline in net profit in the first three months of the year, as Temu's owner braced for a fierce trade war between Beijing and Washington, AFP reported.

The Shanghai-based company announced that net profit for the quarter ending March 31 was $2 billion, down 47% year-on-year.

The decline came at a time when the economic superpowers are embroiled in another fierce trade conflict, which last month led US President Donald Trump to cancel tariff exemptions on goods worth less than $800.

The relief had long been an important part of the business model of platforms offering cheap goods such as Temu.

In a statement accompanying the financial results, PDD Holdings co-CEO Lei Chen said the company had made “significant investments... to support merchants and consumers” and to cope with “rapid changes in the external environment.”

“These investments impacted short-term profitability but enabled merchants to adapt,” he said, emphasizing that they are focused on “strengthening the long-term health (of the platform).”

The company also reported a slowdown in revenue growth for the fourth consecutive quarter.

It said first-quarter revenue rose 10% year-on-year to $13.2 billion.

However, this is less than the 24% increase reported in the previous three months and a significant decline from the 131% increase at the beginning of 2024.

The slowdown in growth was “expected,” according to PDD Holdings CFO Jun Liu, who added that the decline was “accelerated by changes in the external environment.”

She warned that the company's financial results “may continue to reflect the impact of ongoing investments... during uncertain times.”

PDD's depositary receipts, listed on the New York Stock Exchange, plummeted more than 13%.

As part of the détente in the tariff dispute between China and the US, Trump signed an executive order this month setting tariffs on “de minimis” goods sent through the US Postal Service at 54% of their value or $100.

The previous tariff was 120%. |BGNES