PDD Holdings is experiencing a significant decline in its stock price following the U.S. Postal Service's announcement of a temporary suspension of inbound parcels from China and Hong Kong. This decision, effective immediately and lasting "until further notice," is part of a broader trade policy shift that includes new tariffs targeting the "de minimis" trade loophole. This loophole has been crucial for Chinese e-commerce companies like PDD Holdings' Temu, allowing them to ship low-cost goods to the U.S. without incurring duties. The suspension of USPS services could disrupt the supply chain for these companies, potentially increasing costs and affecting their competitive pricing strategy in the U.S. market.
The impact of this suspension is compounded by the fact that cross-border e-commerce companies rely heavily on USPS for last-mile deliveries, with about 31% of such deliveries being handled by the postal service. The suspension could force these companies to seek alternative, potentially more expensive, shipping options, which might lead to higher prices for U.S. consumers. Chris Pereira, president and CEO of consulting firm iMpact, noted that USPS has traditionally been a cost-effective option for small sellers in China, and the suspension could lead to increased costs for sellers.
PDD Holdings' American Depositary Receipts (ADRs) are down 6.59% to $106.53 as of February 5th, reflecting investor concerns over the potential impact of these logistical challenges on the company's U.S. operations.