"FedEx will report a quarterly profit hit from President Donald Trump's decision to end tariff-exempt treatment for popular direct-to-consumer shipments when the global delivery firm reports results on Thursday, analysts said. FedEx's fiscal first quarter, which ended on August 31, captures the impact from the May 2 end of "de minimis" exemptions for packages from China and Hong Kong. They accounted for roughly three-quarters of the roughly 1.4 billion annual packages that had been admitted to the U.S. under the exemption that let shipments valued at less than $800 enter duty free."
"The U.S. also removed de minimis exemptions for the rest of the world on August 29, with full financial effects yet to come. "The key focus for investors is likely to be the end of the de minimis exemption globally and potential quantification of this, which could be a negative surprise," Morgan Stanley analysts said in a recent note."
"John Dietrich, the parcel delivery giant's chief financial officer, said in August the company expected a roughly $170 million hit from U.S. tariffs, largely from goods from China, during the latest quarter. That would represent about 0.8% of overall revenue during that period, Deutsche Bank analysts said."
FedEx's fiscal first quarter through August 31 reflects the May 2 end of de minimis exemptions for packages from China and Hong Kong, which previously covered about three-quarters of roughly 1.4 billion annual duty-free shipments under the $800 threshold. The U.S. extended the removal of de minimis exemptions globally on August 29, with broader financial impacts still unfolding. Analysts have lowered profit targets and expect a negative surprise when quantification emerges. CFO John Dietrich estimated about a $170 million hit from U.S. tariffs in the quarter, roughly 0.8% of revenue. Competing carriers reported volume declines after the policy change.
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