Bank of America is stepping to the sidelines on two of the world's biggest shipping companies after President Donald Trump's broad elimination of the de minimis shipping exemption. Analyst Ken Hoexter downgraded UPS to underperform from neutral and FedEx to neutral from buy, placing weaker expectations on companies generally considered as bellwethers of the U.S. economy. He lowered his price target on UPS by $8 to $83, implying a 1% dip, and also decreased his target on FedEx by $5 to $240, suggesting 6.3% potential upside. "We lower our ratings ... as we account for increased pressure on volume and costs, following our recent look at de minimis impacts to airfreight carriers," Hoexter said in a Thursday note to clients. Trump's removal of the de minimis exemption , which allowed low-value packages to arrive to the U.S. without trade duties, went into effect on Friday. Under the new policies, any imported goods sent through the international postal network valued at or under $800 are now be subject to applicable duties. Shipments that were under this duty-free status account for 92% of all cargo arriving to the U.S., or up to four million packages daily. FedEx and UPS account for a significant portion of the daily package volume arriving to the U.S., Hoexter pointed out. The analyst said that International Priority & Economy packages represent 17% and 16% of of FedEx's UPS' revenues, respectively, translating to about 1.1 million packages per day of FedEx's 17 million daily average packages and about 1.7 million of UPS' 20 million daily average. "The combined 2.8 mil are not all de minimis, but a sizable portion of the 4 mil daily de minimis shipments," Hoexter said, adding that "the removal of the de minimis exemption is expected to result in a muted air peak season in '25 as the tight peak markets in '23/'24 were driven by air demand from Chinese e-commerce players using the de minimis loop-hole." Headwinds tied to this policy removal have already shown up in UPS' results. The company on July 29 reported a decline in second-quarter profit and revenue , and said that its May and June average daily volumes fell 34.8% year-over-year on its U.S.-China trade lane since the end of de minimis exemption for imports from China and Hong Kong effective May 2. UPS 1Y mountain UPS stock performance over the past year. UPS shares are down about 33.5% this year, while FedEx shares have dropped nearly 19.8%.
