U.S. and China Temporarily Reduce Tariffs; UPS Faces Uncertainty

Washington, D.C. — The United States and China have announced a 90-day agreement to temporarily cut reciprocal tariffs, which has raised hopes for easing global trade tensions. This agreement is particularly beneficial for the United Parcel Service (UPS), a global shipping giant.

Despite the positive signs, uncertainty remains as long-term trade relations between the two nations settle. Last month, UPS reported its first-quarter earnings for 2025 but did not update its full-year outlook, citing the need for greater clarity in the macroeconomic environment.

UPS’ earnings per share were $1.49, exceeding the Zacks Consensus Estimate of $1.44—a 4.2% improvement from the previous year. However, while revenue of $21.5 billion outpaced expectations, it represented a 0.7% year-over-year decline. “The current uncertainties are influencing our guidance, and we can’t see into the future just yet,” a UPS spokesperson stated.

Domestic Package revenues rose slightly to $14.46 billion, but the international segment saw a 2.7% increase, fueled by a rise in average daily shipments. Meanwhile, the Supply Chain Solutions division faced a significant decline, down 14.8% year-over-year due to the divestiture of Coyote Logistics.

UPS has projected a second-quarter operational margin of approximately 9.3%, with expected revenue around $21 billion. However, the company anticipates a decline in package volumes, causing concern among investors.

As geopolitical tensions and inflation continue to affect consumer sentiment, UPS faces challenges in maintaining growth. The company has underperformed its peers due to shipping volume declines. Year-to-date, UPS shares have fallen by 32.6%, significantly more than the 25.5% decline seen in the industry.

Amidst these challenges, analysts caution against buying UPS stock at this time, emphasizing the need for a more stable economic environment before making investment decisions. “Until we see more clarity in trade relations and market conditions, it’s prudent to wait,” one financial expert advised.

UPS currently holds a Zacks Rank of 4 (Sell), reflecting widespread concerns regarding its short-term prospects.