FedEx Corporation experienced a significant decline in its stock value on June 25, 2025, with shares falling nearly 6% in premarket trading. This drop followed the company’s announcement of a cautious profit forecast for the upcoming quarter and its decision to withhold full-year earnings guidance. The primary factors influencing this downturn include recent alterations in U.S. trade policies, particularly the elimination of duty-free status for low-value imports from China, which have adversely affected international shipping demand.
Impact of Tariff Policy Changes
The U.S. government’s decision to revoke the “de minimis” exemption for shipments valued under $800 from China and Hong Kong has had a pronounced effect on FedEx’s operations. This exemption previously allowed such shipments to enter the U.S. without incurring tariffs, facilitating a steady flow of low-cost goods from Chinese e-commerce platforms like Temu and Shein. The removal of this exemption has led to a $170 million reduction in FedEx’s revenue for the quarter, as the demand for these shipments has significantly decreased .
In response to the diminished demand, FedEx has reduced its shipping capacity between Asia and the Americas by over 35%. CEO Raj Subramaniam highlighted the volatility of global demand and the challenges posed by unpredictable trade policies during the company’s earnings webcast .
Financial Performance and Forecast
Despite the challenges, FedEx reported better-than-expected earnings for the fourth quarter ending May 31, 2025. The company achieved an adjusted earnings per share (EPS) of $6.07, surpassing analysts’ expectations of $5.84. Revenue for the quarter reached $22.2 billion, exceeding projections of $21.79 billion. These results were bolstered by cost-cutting measures and improved export volumes .
However, the company’s outlook for the first quarter of fiscal year 2026 is less optimistic. FedEx anticipates an EPS ranging between $3.40 and $4.00, slightly below the consensus estimate of $4.05. The company has refrained from providing a full-year forecast, citing uncertainties surrounding global trade policies and economic conditions .
Broader Economic Implications
FedEx’s performance is often viewed as a barometer for global economic health due to its extensive involvement in international shipping and logistics. The company’s challenges reflect broader concerns about the impact of trade policies on global commerce. Analysts have noted that the elimination of the de minimis exemption and the imposition of new tariffs have disrupted supply chains and increased costs for businesses and consumers alike.
Investment director Russ Mould remarked on the significance of FedEx’s decision not to provide a full-year outlook, suggesting it may indicate deeper economic issues beyond the company’s immediate challenges .
Strategic Adjustments and Future Outlook
In light of the current economic landscape, FedEx has announced plans to implement a $1 billion cost-cutting initiative for fiscal year 2026. This move is part of the company’s broader strategy to navigate the complexities of the global trade environment and maintain profitability amid declining demand .
While the company faces headwinds from changing trade policies and economic uncertainties, it remains committed to adapting its operations to meet evolving market demands. FedEx’s ability to manage these challenges will be critical in determining its performance in the coming fiscal year.
