China Hit With 54% "Reciprocal Tariff" Rate Following Trump Address. 3 Things Pinduoduo Stock Investors Should Know

Jeremy Bowman, The Motley Fool

Sat, Apr 5, 2025, 3:51 PM 4 min read

Stocks plunged on Thursday in response to President Donald Trump's "reciprocal tariffs."

While the president had telegraphed his desire for punitive tariffs to try to balance the trade deficit the U.S. has with much of the world, investors were taken aback by their size. China has long served as a scapegoat for Trump so perhaps it's not a surprise that goods imported from China will now face a 54% tariff, which includes a 20% rate the president imposed earlier.

U.S. stocks tumbled on the news, but the impact on Chinese listings was much more modest, as the iShares MSCI China ETF was down just 0.9% on Thursday.

International stocks are outperforming U.S. stocks so far this year, and that makes sense. Not only do international stocks have less exposure to Trump's trade war and the weakening consumer confidence in the U.S., but valuations are much lower in international equities, especially entering the year.

China stocks are especially cheap right now, and one that has been a standout performer in recent years is PDD Holdings (NASDAQ: PDD), the parent of Pinduoduo and Temu, which is challenging Alibaba and JD.com for e-commerce supremacy in China. Let's take a look at what PDD stock investors should know about the tariffs.

The 54% tariffs being imposed in China will affect the Chinese economy in a number of ways. Already, a number of companies like Nike have moved some of its production out of China to neighboring countries like Vietnam, and that trend could accelerate as companies looking to avoid the tariffs move production to countries with lower rates or even to the U.S.

In 2024, U.S. imports from China totaled $438.9 billion. In addition to sending production out of China, the trade war could also weigh on an already weak Chinese economy if it makes goods more expensive, and China has already said that it will impose its own tariffs to protect its economy and its interests.

The size of the impact on the Chinese economy is unclear, but more consumer weakness will weigh on e-commerce operators like PDD Holdings.

PDD Holdings doesn't break down its revenue by region, but the company has put considerable effort into marketing Temu, its low-cost e-commerce platform, enough so that it's made the digital advertising market more competitive and it's grabbed market share from a number of e-commerce companies and other retailers.

Amazon has responded to the threat from Temu and Shein by launching Haul, its own low-cost platform, though it's unclear how it's performing.