FedEx Reports $170M Tariff Hit, China-US Volumes Drop

FedEx is facing significant challenges due to the ongoing impact of President Donald Trump's trade war, particularly the elimination of the $800 de minimis exemption for small parcel imports from China, which has sharply reduced freight volumes on its most profitable China-to-U.S. trade lane. This development has caused FedEx to slash its Asia-to-U.S. air freight capacity by over 35% and led to a forecast of flat to minimal revenue growth and lower-than-expected earnings per share for the upcoming quarter. The company has refrained from providing full-year guidance because of the unpredictable global trade environment, with executives emphasizing that the slowdown is driven primarily by policy changes rather than demand. Despite these headwinds, FedEx reported a 13% increase in net income for the last quarter, partly due to its ongoing efforts to reduce costs and integrate its ground and air shipping networks. Investors have reacted negatively, with FedEx shares dropping about 6% following the warnings and down 18% year to date, reflecting broader concerns about weakening consumer confidence and industrial demand. While FedEx is adapting its network and aims for long-term efficiency improvements, the immediate outlook remains uncertain amid volatile trade policies and tariff pressures.