Meta is facing a potential loss of up to $7 billion in ad revenue in 2025 due to escalating trade tensions between the US and China. The impact of stricter US trade tariffs is already being felt, particularly through reduced ad spending by major Chinese retailers such as Temu and Shein. These companies have been key advertisers on Meta’s platforms, including Facebook and Instagram, making the conflict a serious risk to Meta’s ad-based business model. China currently stands as Meta’s second-largest market after the United States.
According to the company’s annual report, Meta’s revenue from China in 2024 reached $18.35 billion—over 11% of the company’s total earnings. Temu and Shein, in particular, contribute significantly to this figure. Any significant reduction in their ad spending could have a direct and negative impact on Meta’s financial performance. There are already clear signs of this trend. CNBC reports that Temu has cut its promotional costs in the US, and its ranking in the Apple App Store has declined sharply following the introduction of the new tariffs. If this trend continues into 2025, Meta could see a substantial hit to its bottom line.
A Looming Recession Could Deepen the Impact
The situation may become more serious if the global economy enters a recession. Analysts are warning that the combination of an economic downturn and the ongoing trade conflict could eliminate up to $23 billion in ad revenue for Meta in 2025, potentially reducing its profit by as much as 25%. According to MoffettNathanson, “Meta is particularly vulnerable to a decline in Chinese advertiser spending.” The firm also noted that in the event of a recession, Meta would likely experience a dual challenge: a general slowdown in global ad spending and a sharp decline in investment from China, adds NIX Solutions.
Since Donald Trump’s re-election as US President, Meta’s share price has dropped 19%, falling to $499.36. However, despite these emerging risks, analysts are maintaining a “buy” rating on Meta’s stock. The company has yet to issue an official response to these developments. First-quarter results are expected next week, and we’ll keep you updated as more information becomes available.