$PDD(PDD.US) $Alibaba(BABA.US) $JD.com(JD.US) Early this morning, U.S. President Trump announced a global tariff increase and the complete cancellation of the tariff exemption for small packages valued under $800. This means that all applicable tariffs will now be charged on packages sent through non-postal channels. Although this decision was initially announced in January, it has not been fully implemented due to difficulties.

Among various e-commerce companies, Pinduoduo (PDD) experienced the largest decline in after-hours trading, primarily due to its high proportion of overseas business. While Alibaba also has international e-commerce operations, its current market focus and investment strategy are centered more on Alibaba Cloud's AI demand and the rebound of domestic e-commerce. As a result, its stock price was less affected by the tariff changes.

To estimate the impact of these tariff adjustments, let’s consider Temu as an example. Assume a product that costs $10 and has a retail price of $20 before the adjustment. Following the policy change, we apply a comprehensive tax rate of approximately 65% based on the overall tariff increase from the U.S. to China. (Actual rates vary depending on the type of goods, but we are simplifying it for this example).

The calculation for the increased tax base is quite complex. Generally, it includes the export price plus a portion of transportation and other costs. For this illustration, we will use a cost price of $10 plus $1.50 in transportation costs (which is about half of the total actual transportation cost). Applying the 65% tax rate to this total, the tax fee would be approximately $7.50. (Note that this is a rough estimate for illustrative purposes; actual calculations involve more factors.)

If the entire tax fee is passed on to consumers, the retail price would need to increase by 37.5%. Conversely, if the company chooses to absorb all the tax fees and keeps the retail price unchanged, its gross margin after fulfillment would decline significantly, dropping from $7 to -$0.50. This impact is clearly substantial.

In summary, while the potential effects on the business are significant, investing in overseas operations is not the main issue; it's essential to focus on the core logic behind these decisions.