Temu operator PDD tumbles as trade war hits sales, profit
Revenue for the March quarter was 95.7 billion yuan ($13.3 billion), falling short of the average analyst estimate of 101.6 billion yuan. Net income totaled 14.7 billion yuan, while analysts had expected 25.7 billion yuan. PDD's US depositary receipts tumbled 19% in premarket trading in New York on Tuesday.
PDD offered faint hope for improvement in the near term. It's facing intensifying competition in the domestic China market and shifting trade policies that have hurt Temu, the discount e-commerce platform that had propelled revenue growth abroad in quarters past. PDD Chairman Chen Lei warned the company will have to make pricey investments to adjust its business model.
'This effort will likely weigh on our profitability in the short term and even for considerable period of time to come,' he said in a conference call after results.
Chen said the company has to invest and charge lower fees for its merchants to help the e-commerce ecosystem. It's also trying to fill more Temu orders by sourcing merchandise locally to insulate operations against trade policies.
The US eliminated what's known as the de minimis exemption that allowed PDD merchants to ship orders of less than $800 into the US duty free. That loophole had helped Temu ship T-shirts, dresses and other clothes to American consumers at bargain-basement costs.
'Amid the rapidly changing external environment, our global business is working with merchants across regions to bring stable prices and abundant supply to consumers around the world,' Chen said. 'No matter how policies shift, we'll continue to strengthen our operations in the markets we serve, helping more local merchants grow on our platform and enabling more orders to be fulfilled from local warehouses.'
PDD's sales growth rate slowed to 10% in the current quarter, down from 24% the quarter before and 131% the quarter before.
Temu has worked to expand in other markets to reduce dependence on the US, but it's also facing potential regulatory challenges elsewhere. Japan, a major Asian market, is mulling a review of the tax exemptions for small parcels on concerns of fair competition. Meanwhile, the EU is also considering charging a flat fee for those packages, mainly from China.
PDD's results come after its peer JD.com Inc. saw the fastest revenue growth in three years thanks to government stimulus measures to boost purchases. Alibaba Group Holding Ltd. also reported better-than-expected growth in domestic retail, although overall results disappointed.
Beijing has intensified its national trade-in and purchase subsidies that were first launched last year to encourage domestic consumption of products from smartphones to cars. The policy has proved popular among consumers, and the recent progress in talks between Beijing and Washington should also have eased some pressure on China's economy. –BLOOMBERG
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The Star
2 hours ago
- The Star
Trump piles up trade deals as Asia agrees to open up to American goods: Analysis
AUSTIN: It's no easy feat to catch Washington's formidable trade lobbies and relentless, scoop-hungry journalists off guard. Yet on Tuesday (July 22), US President Donald Trump managed to do exactly that. On a day when experts and analysts were poised to dissect a potential deal with the Philippines, awaited after President Ferdinand Marcos Jr's visit to the White House, Trump blindsided everyone by announcing a 'massive' deal with Japan. 'We just completed a massive deal with Japan, perhaps the largest deal ever made,' he said on his social media platform Truth Social. 'Japan will invest, at my direction, $550 billion dollars into the United States, which will receive 90 per cent of the profits. This deal will create hundreds of thousands of jobs - There has never been anything like it,' he added. US$550 billion is S$703 billion. Confirmed by Japan's chief negotiator Ryosei Akazawa, the deal slashes US tariffs on imports from Asia's second-largest economy to 15 per cent, well below the 25 per cent threat that loomed after the July 9 tariff pause ended. Japan will also accede to a key White House demand and open its market to American cars, trucks, rice and certain other agricultural products. In a win for Japan's powerful carmakers, their exports to the US will attract lower tariffs of 15 per cent from the current 25 per cent. The announcement stole the thunder from the Philippines deal, which had been previewed only hours earlier on Truth Social. Trump said the Philippines exports to the US will be subject to a 19 per cent tariff - higher than the 17 per cent initially proposed in April but lower than the 20 per cent threatened earlier in July. In contrast, the Philippines will levy zero tariffs on US goods. Threaten steep tariffs to make others buy more and invest more On the same day, further details emerged on the July 16 agreement with Indonesia, South-east Asia's largest economy. Key provisions included the elimination of nearly all Indonesian tariffs on US goods and a 19 per cent US tariff on Indonesian exports, with certain goods containing content from 'nonmarket economies', read China, to be tariffed at 40 per cent. It was also agreed that Indonesia would provide critical minerals to the US and would purchase Boeing aircraft and American farm products. Such details are still missing from the first deal struck by the Trump administration with a South-East Asian nation, Vietnam, in early July. While negotiations are reportedly still underway, Trump's July 2 Truth Social post revealed key terms of the Vietnam deal, including a 20 per cent tariff on Vietnamese imports to the US and a 40 per cent tariff on transshipped goods, in exchange for Hanoi's commitment to eliminate all tariffs on American exports. Within the span of a month, thus, the White House has unveiled deals not only with Asia's second-largest economy but also with three key Asean economies. For the Asian partners yet to strike deals, such as India and Singapore, these deals set a precedent and create pressure to negotiate similar terms to avoid punitive tariffs and maintain strong trade relations with the US. High-level talks between the US and South Korea talks are scheduled for July 25, with Seoul considering politically sensitive concessions, for example in agriculture and autos, to avert steep US tariffs, which currently stand at 25 per cent but have been postponed to Aug 1. As part of a broader US effort to reset global trade relationships, it would seem that Mr Trump's aggressive tariff strategy is delivering some visible results. All four deals share a common goal: opening markets to American goods to cut trade deficits and support domestic industries. Two other trends are also clear: Trump's steep tariff threats have been effective, and despite falling short of the promised 90 deals in 90 days, analysts are noting a surprising surge in agreements. 'I was very surprised to hear this deal announced today,' Dr William Chou, the deputy director of Hudson Institute's Japan Chair, told The Straits Times. The US$550 billion on top of Japan's current US$860 billion foreign direct investment in the US would make Japan the top investor in the US, head and shoulders above any other country, he noted. Will there be purchase, investment agreements in deal with China? The deals with Asian partners have also attracted the notice of those monitoring US-China trade. 'There was a lot of attention on what would come out of these deals, especially (with) Vietnam, on transshipment and rules of origin. Unfortunately, the devil is in the details and we don't have any details,' said a source who spoke on the condition of anonymity because he advises American companies engaged in business with China. But the Japan agreement signals that the US is expecting purchase agreements in trade deals and that has high significance for a highly anticipated visit to China by Trump, he added. During a press conference alongside Marcos, Trump hinted at a visit to China 'not too far into the future' to meet Chinese President Xi Jinping. But no firm date has been set yet and Chinese imports could be subject to tariffs higher than 50 per cent unless new agreements are reached. 'Many of us are wondering if there will be a focus on purchase agreements similar to phase one trade deal with China in Trump's first term.' The huge investment component in the Japan deal has also sparked the idea that a deal with Beijing might involve large investment commitments from China. 'President Trump in the Oval Office has welcomed Chinese investment in the US. This is obviously in contrast to the hawks in his administration and in Congress, but Trump is ultimately the one that determines China policy,' said the source. However, Dr Chou said a direct geopolitical implication of the flurry of trade deals - with Japan, Indonesia, Vietnam, the Philippines, and likely soon South Korea - is expected to be for China. He said it meant that China can no longer use trade as a wedge issue between the US and Indo-Pacific countries. 'Given the White House's desire to negotiate a good deal with China - and in the wake of China's use of rare earths as economic coercion in the past few months - these trade deals by the White House strengthen Washington's negotiation position with Beijing,' Dr Chou noted. 'I think the administration's demonstration of its priorities, the 10 per cent baseline and long-term frameworks for balanced trade, have become increasingly clear to trading partners,' he said. 'Combined with Trump's willingness to live with tariffs, and the news of customs duties of US$27 billion last month, it provided impetus for trading partners to strike a trade deal,' he added. Customs duties fetched about US$27 billion in June, three times higher than in the same month of 2024, after Trump levied across-the-board 10 per cent tariffs on imports in April on top of other selective duties. On an annual basis, tariff collections have totaled US$113 billion, rise of 86 per cent over last year. Minimising imports doesn't augur well for any economy Less impressed was Frank Lavin, senior fellow at the Hoover Institution, a veteran trade negotiator and former ambassador to Singapore. 'It is hard to fully understand Trump's ultimate goals because at times he talks about the trade balance, at times he talks about reciprocity of tariff rates, at times he talks about re-shoring American manufacturing, and at times he talks about increasing tariff revenue to the US Government,' Lavin said. 'There are any number of contradictions among those four goals,' he said. For instance, if the goal of high tariffs is to boost US manufacturing by disincentivising imports, tariff revenues will fall in tandem with declining imports. It seems that his over-riding goal is a form of mercantilism, attaining greater market access for US firms, and reducing market access to foreign firms. 'It is not clear how this will help the US economy,' he said. Economists believe that maximising exports while minimising imports in an interconnected global marketplace does not augur well for any economy, regardless of its size. Such policies risk economic inefficiency, trade wars and shortchange consumers. - The Straits Times/ANN
New Straits Times
2 hours ago
- New Straits Times
Tariff deals with US lift Asian stocks; currencies upbeat
NEW YORK: Equities advanced across emerging Asia on Wednesday as investors cheered new US trade deals, with stocks in Indonesia resuming their rally as Southeast Asia's largest economy hammered out tariff arrangements with the United States. The MSCI index of emerging Asian equities jumped 1 per cent to its highest since mid-November 2021, largely driven by a gain of 1 per cent in Taiwan's benchmark index. Thai stocks jumped more than 2 per cent to a two-month high, while equity benchmarks in Indonesia and the Philippines gained as much as 0.7 per cent. US President Donald Trump announced a new tariff of 19 per cent for goods from the Philippines, a touch below the rate of 20 per cent he threatened earlier this month. Indonesia hashed out details of its pact with the United States to eliminate tariffs on more than 99 per cent of US goods and scrap barriers to American firms, while the US will drop its threatened tariff rate on Indonesian products to 19 per cent from 32 per cent. "Asian equities are rallying on a cocktail of positives," said Mohit Mirpuri, equity fund manager at SGMC Capital. "Tariff clarity with the United States across multiple fronts, including Japan and the Philippines, is lifting sentiment," he told Reuters in a text message. Signs of cooling inflation and policy support from China contributed to the risk-on approach across the region, he added. "Investors are rotating back into Asia, where valuations look compelling and policy risk is finally easing." Analysts saw the economic impact of the Philippines tariff rate of 19 per cent as relatively limited. A note of caution was struck by William Bratton, head of APAC cash equity research at BNP Paribas, warning that the rates, though less severe than feared, could prove disruptive for Asian exporters and punitive for earnings in the long term. Earlier, Japan and the United States struck a deal to lower to 15 per cent the tariff on all imported goods from the steep 25 per cent Trump had previously threatened, with Japan also pledging to invest US$550 billion in the US Elsewhere in Southeast Asia, stocks in Singapore gained for a 13th straight session in their longest streak on record. They had traded most of Tuesday in the red but ended slightly higher. Stocks in Kuala Lumpur added 0.3 per cent. Equities in Bangkok were set for their strongest day in almost a week. The appointment of rate-cut advocate Vitai Ratanakorn as governor of the Thai central bank, has boosted investor confidence, though concerns linger on its independence. "His (Vitai's) remarks and public statements suggest a decisive shift towards more aggressive monetary easing and closer coordination with government fiscal policies," analysts at Citi said in a note. Among currencies, South Korea's won and Taiwan's dollar appreciated up to 0.4 per cent, while Indonesia's rupiah , Thai baht, Singapore dollar, and Malaysia's ringgit traded largely unchanged. The MSCI index of global emerging market currencies rose to a two-week peak.
Barnama
2 hours ago
- Barnama
Trump Says Japan Agrees To 15pct reciprocal Tariff Under "Massive" Deal
FILE PHOTO: U.S. President Donald Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, D.C., U.S., April 2, 2025. REUTERS/Carlos Barria/File Photo WASHINGTON, July 23 (Bernama-Kyodo) -- United States (US) President Donald Trump said Tuesday that he has struck a "massive" trade deal with Japan, under which the Asian country has agreed to a so-called reciprocal tariff of 15 per cent, Kyodo News reported. Japan has secured concessions as well, with the Trump administration halving its additional 25 per cent auto tariff for cars from the Asian country. "There has never been anything like it," Trump said on social media, adding that Japan will open its markets for cars, trucks, rice, certain farm products and other goods. bootstrap slideshow The announcement was made after Japan's top tariff negotiator, Ryosei Akazawa, met with Trump at the White House. Akazawa arrived in Washington on Monday for his eighth round of in-person negotiations with US Cabinet members. Japan was set to face a country-specific duty of 25 per cent on its goods if a deal had not been struck with the Trump administration by Aug 1, when a pause on Trump's reciprocal tariffs, targeting dozens of major US trading partners, is due to expire. Trump said, "at my direction", Japan will invest US$550 billion in the United States under the deal. "This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan," Trump wrote on his Truth Social platform. Trump later said at an event at the White House that he "just signed the largest trade deal in history" with Japan, adding the two countries will form a joint venture for liquified natural gas in Alaska. In the weeks leading up to Tuesday's agreement, Trump indicated that striking a deal with Japan before the Aug 1 deadline would be difficult. He intensified pressure by repeating his frequent accusation that the key US ally had been reluctant to import American cars and agricultural products.
