les and challenges emerge,” Jun Liu, vice president of finance of PDD Holdings, said in a statement. “This trend has been further accelerated by the changes in the external environment in the first quarter. Our financial results may continue to reflect the impact of sustained investments in the ecosystem as we support merchants and consumers through uncertain times.” The causes are manifold but interconnected. At home, PDD is caught in the crossfire of an intensifying price war among China’s e-commerce giants. Abroad, its breakout star Temu is reeling from the aftershocks of mounting US trade tensions. In both arenas, PDD faces mounting costs, shrinking margins, and a pressing need to adapt its playbook for a more uncertain era. A domestic market under stress  China’s domestic e-commerce environment has never been for the faint of heart. But in recent quarters, the battle for consumer attention has turned into a full-scale war of attrition. Alibaba, JD, and PDD have slashed prices to win over cautious shoppers, who are tightening belts amid a prolonged property crisis and tepid consumer confidence. While Pinduoduo’s value-for-money focus once gave it a clear edge in downturns, even that moat is narrowing. JD beat earnings expectations last quarter, aided by government-backed trade-in incentives for high-ticket items like appliances – categories where it holds a structural advantage. Alibaba, meanwhile, has been revamping its commerce business and logistics network to catch up. Unlike its rivals, PDD Holdings operates solely as a third-party marketplace. This limits its ability to pass on government stimulus directly to consumers. “As a third-party marketplace, we face inherent limitations when it comes to passing on policy incentives to consumers, which puts our merchants at a clear disadvantage compared to our competitors that have a first-party business,” said Lei Chen, chairman and CEO of PDD Holdings. “While this issue was discussed last year, the challenge is still here due to limitations in our team’s capabilities.”  Global ambitions, geopolitical realities  In early this month, the US ended ‘de minimis’ treatment for packages from China, escalating a tit-for-tat tariff conflict that has already rattled global supply chains.  Temu was forced to raise prices and briefly halted shipments from China altogether after the de minimis tariff exemptions were revoked. Though it has since resumed deliveries after a temporary 90-day trade truce.  “In our global business, radical changes in the external policy environment such as tariffs have created significant pressure for our merchants who often lack the capability to adapt quickly and effectively,” Chen said.  Betting on the long game PDD Holdings’ leadership insists it is playing the long game. Its newly expanded ‘100 billion yuan support program’ aims to insulate small merchants from shocks by slashing fees and providing subsidies. “Since the second half of last year, we significantly expanded our fee reduction program for merchants,” Chen added.  “And this year, after it has become increasingly clear that the merchants are expected to face further pressure and convinced in the long term value of our merchant support initiative, the management team made the strategic decision to launch the 100 billion yuan support program.” Chen, for his part, framed the situation as a necessary move. “In the first quarter, we made substantial investments in our platform ecosystem to support merchants and consumers amid rapid changes in the external environment,” Chen said. “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.”