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Meta could take a $7 billion hit this year because of Trump's tough China tariffs
METAMeta Platforms(META) CNBC·2025-04-22 18:02

Core Insights - Meta's online advertising business is projected to face a 7billiondeclinein2025duetotheimpactofPresidentTrump′stariffsonChina,affectingretailerslikeTemuandShien[1][3][5]−Thecompany′srevenuefromChinawasreportedat7 billion decline in 2025 due to the impact of President Trump's tariffs on China, affecting retailers like Temu and Shien [1][3][5] - The company's revenue from China was reported at 18.35 billion in 2024, accounting for over 11% of total sales, indicating the significant role of Chinese advertisers in Meta's revenue stream [3][5] - Analysts suggest that if Chinese retailers reduce their advertising budgets, it could severely impact Meta's ad sales, with potential losses reaching 23billionifarecessionoccursalongsideongoingtradetensions[5][6]ImpactofTradeDispute−TheMoffettNathansonresearchhighlightsthattheU.S.−ChinatradedisputeisleadingtoareductioninadvertisingspendingfromChineseretailers,whichiscrucialforMeta′srevenue[2][4]−Therearealreadyindicationsofreducedadspending,asseenwithTemu′scutbackinU.S.advertisingandadropinitsapprankings[4][5]MarketOutlook−AnalystsmaintainaBuyratingonMetabuthaveloweredtheirtargetpricefrom23 billion if a recession occurs alongside ongoing trade tensions [5][6] Impact of Trade Dispute - The MoffettNathanson research highlights that the U.S.-China trade dispute is leading to a reduction in advertising spending from Chinese retailers, which is crucial for Meta's revenue [2][4] - There are already indications of reduced ad spending, as seen with Temu's cutback in U.S. advertising and a drop in its app rankings [4][5] Market Outlook - Analysts maintain a Buy rating on Meta but have lowered their target price from 710 to $525, reflecting concerns over the potential impact of reduced ad spending and economic downturns [6] - The company is particularly vulnerable to a decline in advertising from Chinese sources, which could compound the effects of a broader economic recession [6]