FedEx, like many global companies, has been scrambling to adapt to the Trump administration’s shifting trade policies. After some of Trump’s “Liberation Day” tariffs took effect in April, cross-border shipping volumes declined. The situation worsened in May. Now, the company estimates that tariffs could cost it $170 million between June and August. As CEO Raj Subramaniam said during the company’s quarterly earnings call yesterday, “there’s a lot happening outside of FedEx.”
FedEx actually beat analyst expectations on both revenue and profit for the March-May quarter, reporting $22.1 billion in revenue and $1.65 billion in net income. Still, shares dropped more than 3 percent today (June 25) as investors reacted to the ongoing trade tensions affecting FedEx’s international operations.
The company’s most lucrative shipping route—between China and the U.S.—accounts for roughly 2.5 percent of its revenue. However, the Trans-Pacific lane has come under pressure amid escalating trade friction, including U.S. tariffs on Chinese goods that peaked at 145 percent (and China’s retaliatory levies on U.S. goods at 125 percent) before being partially rolled back, according to CFO John Dietrich.
FedEx expects trade policy impacts to reduce its adjusted operating income by $170 million in the current quarter. Most of that impact stems from disruptions in China-to-U.S. trade and the end of the “de minimis” rule, a tariff exemption previously allowing goods under $800 to enter the U.S. duty-free. The rule’s elimination by the Trump administration has compounded pressures, according to Brie Carere, FedEx’s chief customer officer. Carere noted the company now expects revenue for the June–August quarter to be flat or grow up to 2 percent year-over-year.
In a departure from previous quarters, FedEx has also decided to cut its annual financial forecast. “Obviously, the trade environment is the primary reason that we are focused on [the first quarter] versus a range for the entire year,” Carere told analysts. “We just simply cannot predict how that’s going to play out.”
Still, FedEx’s massive global footprint provides some insulation from trade-related volatility. With operations in more than 220 countries and territories and connections to 99 percent of global commerce, the company remains well-positioned to support customers navigating demand shifts, tariff impacts, and supply chain realignments, CEO Subramaniam said. He added that FedEx is prepared to adjust its routes if trade negotiations require it.
Predicting the trajectory of these rapidly changing trade dynamics, however, remains a major challenge. “It’s very, very difficult to predict what is going to happen over the next 30 to 60 days—or even further,” Subramaniam said. “So, we just have to live with that.”
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
