The situation: The global ecommerce landscape is rapidly evolving as governments raise new trade barriers and tighten regulations.

• The US, South Africa, and Brazil have already closed their de minimis loopholes—which let low-value parcels arrive duty-free—while the European Union is rushing to implement a similar policy.
• At the same time, Chinese tax authorities have ordered major ecommerce platforms—including Amazon, Temu, and Shein—to hand over Chinese sellers’ Q3 sales data as part of a broader crackdown on cross-border tax evasion.

That scrutiny puts companies like Temu parent PDD in a bind, forcing it to comply with new requirements in a stricter trade climate. Nearly 1 in 5 US consumers (19.2%) said shifting US trade policies would lead them to avoid buying from international platforms this holiday season, per Omnisend. That’s a direct threat to PDD, which built its international business on delivering low-cost goods by relying on de minimis exemptions, co-CEO Lei Chen said on the company’s Q3 earnings call.

“We will inevitably face greater challenges and more uncertainties,” he said, adding, “These shifts create significant, unpredictable risks that could weigh on our financial performance in both the short and long term.”

The pressure is compounded by challenges facing PDD’s domestic business due to uneven consumer spending in China.

The context: The comments followed a quarter in which the company delivered mixed results.

• Adjusted earnings per share rose to 21.1 yuan ($2.96), up 13.4% and well above the 16.6 yuan ($2.33) analysts expected.
• Revenues reached 108.3 billion yuan ($15.21 billion), up 9% on stronger online marketing and transaction-service revenues, but still below the 108.8 billion yuan ($15.3 billion) consensus.

Our take: PDD’s results make clear that the era of breakneck growth fueled by de minimis arbitrage is over. As that advantage fades and regulatory scrutiny rises, the company now has to win on the fundamentals such as strengthening its marketplace, attracting local merchants, and supporting sellers more directly.

That’s not easy. However, there are signs of resilience. Monthly active users fell just 3% YoY, a sharp improvement from the 24% decline last quarter, per Sensor Tower data cited by Bloomberg. It’s an early indication that PDD’s emphasis on keeping prices low is keeping shoppers engaged, even as it narrows margins in the process.