Are UPS Layoffs Because of Trump's Tariffs? What We Know
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
United Parcel Service has said it will be cutting 20,000 jobs and shutting 73 buildings, as UPS highlighted the "highly uncertain" trading environment in which it is now operating.
However, the company said that the decision was driven by the increasing automation of its production facilities, as well as a decline in shipping volume due to its Amazon "glide down" plan unveiled in late January.
Newsweek has reached out to UPS via email for comment.
Why It Matters
UPS is the largest courier in the U.S. and ranks among the country's top companies by revenue, having generated $91.1 billion last year. As a major player in the global logistics industry, the company said that the administration's trade policies will demand greater adaptability and strategic oversight in the near-future, but that it remains confident in its ability to navigate the evolving conditions.
What To Know
The announcement came alongside the release of the company's first-quarter earnings. UPS saw a Consolidated Revenues of $21.5 billion, down from $21.7 billion a year prior.
In the release and subsequent earnings call, UPS executives gave several reasons for the decision to shutter 73 U.S. buildings and lay off 20,000 workers, which is in addition to the 12,000 it said it would be cutting last year.
The company said that the latest moves comprised part of its ongoing "Network Reconfiguration and Efficiency Reimagined" initiative, aimed at streamlining the business "through automation and operational sort consolidation in our U.S. Domestic network." UPS said that it expects this to result in $3.5 billion of total cost savings in 2025.
In a call following the results, Executive Vice President Nando Cesarone said that UPS plans to incorporate automation across its facilities, with 400 becoming partially or fully automated by the end of this process. This, alongside the application of artificial intelligence, will result in a "much more efficient operation with less dependency on labor," Cesarone said.
File photo: A United Parcel Service Inc. (UPS) truck is parked at a distribution center on April 4, 2025 in San Diego, California.
File photo: A United Parcel Service Inc. (UPS) truck is parked at a distribution center on April 4, 2025 in San Diego, California.Chief Financial Officer Brian Dykes added that the planned layoffs and building closures were "in line with the total Amazon volume decline."
In January, UPS announced a "glide down" plan to cut transported order volumes with the e-commerce giant "more than 50 percent by the second half of 2026." During the first quarter, Dykes said that package volume from Amazon had already declined by 16 percent, adding that this "was more than we originally planned."
However, CEO Carol Tomé added: "Sixty percent of the volume that we're gliding down is not profitable for us, and by gliding that down, we actually give ourselves financial flexibility to address other scenarios that might come our way."
While the company did not attribute the layoffs or business closures to tariffs directly, Tomé said that the need for adaptability and efficiency had been heightened by the administration's trade policies.
U.S.-China trade lines comprised around 11 percent revenue in 2024, the company said, making it the UPS's most profitable trading route. However, it expects any weakening demand due to the high tariffs on China to be "partially offset" by growth in China to non-U. S. lanes, as well as more goods being shipped to the U.S. from other countries.
What People Are Saying
UPS CFO Bryan Dykes, during Tuesday's earnings call, said: "The macro environment is highly uncertain due to changing trade policy and tariff uncertainty. As a global carrier, the eventual outcomes could result in pressure in some parts of our business and create new opportunities in others.
"We've modeled several different scenarios for how the balance of the year might play out so that we can quickly pivot, continue supporting our customers, and lean into growth."
UPS CEO Carol Tomé said that many of the company's small- and medium-sized business customers are "100 percent single-sourced from China," and that the 145-percent tariffs on Chinese goods was "causing so much uncertainty in the marketplace."
"If we go back to 2018 when China tariffs were imposed, we saw trade move, China to U.S. decline, but China the rest of the world increased, and it all leveled out and our international business actually grew," Tomé said. "So because of our integrated network and our [global] presence, we'll be able to manage through this."
The International Brotherhood of Teamsters, a labor union representing an estimated 300,000 UPS hourly workers, said in response to the layoff announcement: "United Parcel Service is contractually obligated to create 30,000 Teamsters jobs under our current national master agreement. If UPS wants to continue to downsize corporate management, the Teamsters won't stand in its way. But if the company intends to violate our contract or makes any attempt to go after hard-fought, good-paying Teamsters jobs, UPS will be in for a hell of a fight."
What Happens Next
UPS said that the layoffs would take place over the course of 2025, while the 73 buildings were scheduled for closure by June. "We are continuing to review our network and may identify additional buildings for closure," it added.
CEO Carol Tomé said UPS would not be updating its full-year outlook "given today's level of uncertainty."
"Once we are through the second quarter, we will hopefully have more clarity about tariffs and trade and the implications for demand dynamics, and we'll provide an update at that point," she added.
CFO Bryan Dykes said that international revenue is expected to fall around 2 percent from 2024, "due to lower demand-related surcharges and trade uncertainty."
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