FedEx's shares experienced a significant decline following the company's revision of its fiscal 2025 projections, raising concerns about the state of the U.S. industrial economy amidst the backdrop of the Trump administration's wide-ranging tariffs on trade partners. Before the market opened on Friday, the company's stock plummeted by 7%, with CEO Raj Subramaniam acknowledging the challenging business environment the company was operating in. Additionally, UPS saw a premarket drop of 1.3% in its shares.

President Trump's trade tariffs have introduced uncertainty for businesses, leading them to exercise caution in their spending decisions due to the unpredictable economic conditions. Both FedEx and UPS are considered key indicators of the global economy due to their broad involvement across industries. The transportation firms benefit significantly from shipments related to manufacturing, which generate high cargo volumes and profits.

Concerns have been raised by analysts and economists that the import tariffs imposed by Trump could potentially instigate a recession and trade conflict, impacting the demand for transportation and delivery services. FedEx's recent financial results and downward revision of its annual forecast are likely to heighten worries about underlying challenges in the parcel sector, according to Morgan Stanley, potentially overshadowing the company's cost-cutting initiatives.

Despite FedEx's efforts to streamline operations and reduce costs, the surge in demand for lower-margin e-commerce deliveries compared to higher-margin business-to-business shipments, like those from companies such as Temu and Shein, has posed challenges. The company adjusted its fiscal 2025 profit estimate downward to a range of $18.00 to $18.60 per share, a decrease from the previous outlook of $19 to $20. Similarly, revenue expectations for the upcoming 12-month period suggest a flat to slightly lower year-on-year performance, deviating from the earlier forecast of stability.