FedEx Shares Drop 5% as Profit Outlook Flags Tariff-Driven Uncertainty

FedEx Corp. shares fell over 5% in after-hours trading Tuesday after the company issued a cautious profit forecast for the current quarter, highlighting ongoing uncertainty around global demand and the impact of President Donald Trump’s evolving tariff policies.

Despite beating earnings expectations for the fiscal fourth quarter, FedEx declined to provide full-year guidance, citing volatility in international trade and specific exposure to U.S.-China tariff shifts. The Memphis-based delivery giant forecast adjusted earnings of $3.40 to $4.00 per share for Q1 of fiscal 2026, below analyst estimates of $4.06, according to LSEG data.

“The global demand environment remains volatile,” said CEO Raj Subramaniam during the company’s earnings webcast. He cited ongoing tariff-driven disruptions as a key concern impacting forward-looking projections.

China Exposure Pressures FedEx

FedEx is notably more dependent on China-related shipping than rival UPS, whose stock declined by less than 1%. The Biden administration’s rollback of duty-free imports under the $800 de minimis threshold has particularly impacted high-volume, low-cost sellers like Temu and Shein, major FedEx clients for air parcel services.

As a result, FedEx lost a substantial portion of its direct-to-consumer air freight volume. Brie Carere, Chief Customer Officer, confirmed that Trump's tariff adjustments have directly hit demand for U.S.-bound shipments from Chinese factories.

Washington’s imposition of 145% tariffs in April, later reduced to 30% in May, continues to cloud trade predictability between the world’s two largest economies.

Strong Quarter, Muted Outlook

For the quarter ending May 31, FedEx posted:

• Adjusted profit: $6.07 per share (vs. $5.81 expected)

• Revenue: $22.2 billion (vs. $21.8 billion expected)

• Operating margin: Improved due to cost-cutting and stronger export volumes

However, these gains were overshadowed by the weak profit guidance for the coming quarter and broader caution about the macroeconomic environment.

Both FedEx and UPS continue to face challenges as industrial shipping demand stagnates. Meanwhile, consumer preferences are shifting from premium air deliveries to lower-cost ground services.

Looking ahead, FedEx also confirmed plans to spin off its trucking business by June 2026, a move aimed at streamlining operations and improving profitability in a shifting logistics landscape.