This photo illustration created on Jan. 7, 2025, in Washington, D.C., shows an image of Mark Zuckerberg, CEO of Meta, and an image of the Meta logo.
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Chinese online retailers have cut back their spending on Facebook and Instagram ads in reaction to President Donald Trump’s tough trade policy with the country.
Meta’s finance chief Susan Li said Wednesday that “Asia-based e-commerce exporters” have reduced their spending with the social media company. It’s likely those firms did so as they prepare for the de minimis trade loophole ending this Friday, Li said during a first-quarter earnings call.
“A portion of that spend has been redirected to other markets, but overall spend for those advertisers is below the levels prior to April,” Li said.
Trump in early April signed an executive order to end the de minimis trade exemptions for Chinese imports, which benefited online retailers like Temu and Shein. Analysts have said they believe that Temu and Shein make up the bulk of Meta’s 2024 China-related sales of $18.35 billion.
Meta’s advertising sales in the Asia-Pacific region reached $8.22 billion for the first quarter, the company said. That was below Wall Street projections of $8.42 billion.
Li said that Meta’s second-quarter revenue would be in the range of $42.5 billion to $45.5 billion, which was in line with analysts expectations of $44.03 billion.
“It’s very early, hard to know how things will play out over the quarter, and certainly, harder to know that for the rest of the year,” Li said.
The comments echo what Google said last week during its earnings call, warning that it expects headwinds to its advertising business, particularly from the Asia-Pacific region. Similarly, Snap on Tuesday said it had “experienced headwinds to start the current quarter.”
Trump’s China tariffs of 145% also appear to be impacting Meta’s Reality Labs unit, which creates virtual reality and augmented reality devices.
Reality Labs had an operating loss of $4.2 billion while bringing in $412 million in sales during the first quarter.
Meta said its 2025 capital expenditures will be in the range of $64 billion to $72 billion, which is higher than its prior outlook of $60 billion to $65 billion.
“This updated outlook reflects additional data center investments to support our artificial intelligence efforts as well as an increase in the expected cost of infrastructure hardware,” the company said in the earnings release.
Regarding the higher costs of infrastructure hardware, Li told analysts that it’s the result of “suppliers who source from countries around the world.” The higher cost of infrastructure hardware and “higher expected Reality Labs cost of goods sold” has “partially offset” Meta’s lowered projected range for its 2025 total expense, she said.
“There’s just a lot of uncertainty around this, given the ongoing trade discussions,” said Li, adding that Meta is modifying its supply chain as a result.
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