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The actions plunged Thursday in response to President Donald Trump’s “reciprocal prices”.
While the president had telegraph his desire for punitive prices to try to balance the trade deficit that the United States has with a large part of the world, investors were surprised by their size. China has long served as a scapegoat for Trump, so perhaps it is not a surprise that goods imported from China should now face a rate of 54%, which includes a rate of 20% that the president imposed earlier.
American actions fell on the news, but the impact on Chinese lists was much more modest, because the Ishares MSCI China Etf dropped by 0.9% on Thursday.
International actions have been output American actions so far this year, and it has meaning. Not only do international actions have less exposure to Trump’s trade war and weaken consumer confidence in the United States, but assessments are much lower in international actions, especially in the year.
Actions in China are particularly inexpensive at the moment, and one who has been an outside competition in recent years is PDD holdings (Nasdaq: PDD)The parent of Pinduodoo and Temu, which is difficult Alibaba And Jd.com for electronic commerce supremacy in China. Let’s take a look at what investors in PDD shares should know the prices.
Image source: Getty Images.
The 54% prices imposed in China will affect the Chinese economy in several ways. Already, a number of companies like Nike have moved part of its production from China to neighboring countries such as Vietnam, and this trend could accelerate as companies seeking to prevent prices passing production to countries with lower or even in the United States
In 2024, American imports from China totaled $ 438.9 billion. In addition to sending production to China, the trade war could also weigh on an already low Chinese economy if it makes goods more expensive, and China has already declared that it would impose its own prices to protect its economy and its interests.
The size of the impact on the Chinese economy is not clear, but a lower low consumers will weigh on electronic commerce operators like PDD Holdings.
PDD Holdings does not decompose its revenues by region, but the company has made considerable efforts in TEMU marketing, its low-cost electronic commercial platform, enough for the digital advertising market to be more competitive and has entered market share of a certain number of electronics and other retailers.
Amazon Answer the threat of TEMU and Shein by launching transport, its own low-cost platform, although it is not clear how it behaves.
PDD reported $ 54 billion in revenues in 2024, but its raw volume of goods (GMV), or the value of the goods sold on its platform, is probably much greater. At a minimum, the company has probably made $ 5 billion in GMV in the United States, but it is probably several times greater than that, given the impact of TEMU on the electronic commerce market.
Advertising is the greatest source of income for the company, it therefore also depends that advertisers are confident in customer expenses on the platform.
Before the announcement of the prices, some investors were already running in Chinese shares, including billionaire David Tepper, seeing it as an opportunity because Chinese actions are much cheaper than their American counterparts.
In this sense, PDD Holdings could benefit if the prices push the American economy in a recession because it is one of the most popular Chinese actions to have American investors.
Although its growth rate has slowed down in the last quarters, the company declared income growth of 24% in the fourth quarter, continuing to surpass competitors like Alibaba and JD.com.
To one Price / benefit ratio On only 11, there is a good argument for the purchase of PDD according to its fundamental principles.
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John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the board of directors of Motley Fool’s. Jeremy Bowman has positions in Amazon and Nike. The Motley Fool has positions and recommends Amazon and Nike. The Motley Fool recommends Alibaba Group and JD.com. The Word’s madman has a Disclosure policy.
