FedEx will return approximately $800 million in tariff refunds to customers beginning in August, the company revealed Tuesday.
The logistics giant is prepping to reimburse the duties, which it had collected from shippers after the Trump administration levied sweeping tariffs on all U.S. trade partners last year under the International Emergency Economic Powers Act (IEEPA).
Two months after the IEEPA tariffs were invalidated by the Supreme Court in February, FedEx and rivals including UPS and DHL began to file claims with U.S. Customs and Border Protection (CBP) on behalf of customers that sought reimbursements.
CBP anticipates that more than $95 billion in total refunds have either been approved or are set for approval, with nearly $24 billion in refunds having been sent to the Treasury Department for disbursement.
FedEx remains engaged in a separate suit with the U.S. government and CBP over the tariffs, with retailers including Costco, Dollar General and J.Crew also involved in their own similar litigation. The Memphis, Tenn.-based courier is also entangled in multiple class action lawsuits from customers seeking to recover the funds on the grounds that they say were unlawfully collected.
The company disclosed the $800 million figure in its fourth quarter earnings report, which also revealed that revenue for the March-to-May period increased 13 percent to $25 billion, ahead of estimates of $24 billion from analysts polled by FactSet.
The revenue was lifted heavily by higher yields in the Federal Express segment, with U.S. and international package rates skyrocketing 10 percent to $15.58 and $56.17 per package, respectively. The prices were propped up by Iran war-driven fuel surcharges, which added 5 percentage points of benefits to revenue.
New international fuel surcharges took effect June 22, as fees for exports are 34.5 percent, and imports face a 38.75 percent rate. These costs are down from the 34 percent for exports and 38.25 percent for imports from June 8-14, but remain higher than the 30.75 percent export fuel fees and 34.5 percent import charges imposed the week of March 16.
The surcharges have given FedEx more momentum as it is focuses on shipping higher-margin packages to bolster revenues and margins. The rates propped up slow volume growth at the courier, which increased 3 percent domestically to 14.2 million per day and 2 percent globally to 17.1 million daily.
For the quarter, the higher yields were unable to overcome a dip in profit and margins as significant cost headwinds hit the delivery firm.
Net income slightly decreased 3 percent to $1.6 billion in the quarter, although adjusted earnings surpassed analyst expectations at $6.31 per share.
More than $500 million in costs related to the June 1 spinoff of its less-than-truckload division FedEx Freight ($298 million) and its ongoing network transformation initiatives ($204 million) facilitated a drop-off in operating margin, which went from 8.1 percent of revenue last spring to 6.2 percent this year.
Operationally, FedEx indicated it has put last year’s trade policy issues behind it with strength out of the Asia Pacific region.
According to chief customer officer Brie Carere, the region “faced the largest headwind” last year due to the high tariff environment and the scrapping of the duty-free de minimis provision.
During the call, Carere said the region was the primary driver of FedEx’s return to growth in international export package volumes over the past two quarters. The volumes grew 5 percent annually in the fourth quarter.
“We supported changing trade patterns by flexing our network, enabling double-digit international export revenue growth across the Asia-Europe lane, within Asia and U.S. outbound lanes in Q4,” said Carere. “Strength in Asia was a key driver of our international priority volume.”
Looking ahead, FedEx is guiding for 11 percent revenue growth in the 2026 calendar year, with the revenue figure assuming three percentage points of fuel-price driven surcharge benefits.
The courier also expects earnings per share between $16.55 and $17.75, as well as adjusted earnings per share ranging from $16.90 to $18.10. While the adjusted figures estimates imply 20 percent EPS growth from June through December, the forecast did not please shareholders, with company stock sinking more than 6 percent in after-hours trading Thursday.
FedEx anticipates it will incur roughly $350 million in “stranded costs” throughout the 2026 calendar year due to the trucking segment spinoff. Additionally, the company expects another $200 million in headwinds because of the ratification of its new contract agreement with its 5,000 union pilots represented by the Air Line Pilots Association.
The calendar year guidance includes the third and fourth quarters of the completed fiscal 2026 year, alongside the current June-to-December transition period. FedEx amended its fiscal year to align with the calendar year as part of the FedEx Freight spinoff. The 2027 fiscal year will start Jan. 1.
FedEx Freight is expected to report its standalone fourth quarter results on Thursday.
