FedEx CEO Fred Smith said Tuesday that the delivery service has “concerns” about President Donald Trump’s recently-enacted tariffs on steel and aluminum and warned the initiative could offset benefits tied to tax reform.
Speaking to analysts on FedEx’s third quarter earnings call, Smith said historical attempts at tariffs have “shown repeatedly that protectionism is counterproductive to economic growth.” FedEx easily topped Wall Street’s expectations for quarterly profit owing primarily to a $1.5 billion benefit from U.S. corporate tax reform.
“Make no mistake about it – the great benefits that [FedEx Chief Financial Officer Alan Graf] talked about due to the tax reform to some degree will be offset due to increased taxes due to tariffs,” Smith said.
Smith joined a growing chorus of business leaders who have criticized the Trump-backed tariff initiative. The president ordered 25% tariffs on steel imports and a 10% duty on aluminum imports from every country except Mexico and Canada. The changes are set to take effect on March 23.
The heads of 49 prominent retailers, including Walmart, Best Buy and Target, penned a letter asking Trump to not to apply additional tariffs on China. The retailers expressed concern that more tariffs would drive up prices and have a “negative impact” on “America’s working families.”
FedEx reported revenue of $16.5 billion in its third fiscal quarter, marking a 10% increase year-over-year and topping analysts’ projection of $16.15 billion, according to Thomson Reuters data. Earnings-per-share jumped to $3.72, also beating estimates.
Despite the beat, FedEx shares were down slightly in post-market trading.
Smith also addressed the package explosion that injured one employee in Texas and said FedEx has provided “extensive evidence” to authorities in relation to the incident.
“We are very thankful there are no serious injuries from the package that was detonated earlier here at our San Antonio FedEx ground facility,” Smith said. “FedEx has provided law enforcement extensive evidence from our advanced technology security systems designed to protect our teammates, customers and communities we serve.”