It looks as if we could well be headed into one. In this instance, it looks like Trump and his tariff war aren’t the reason for the news coming out of United Parcel Service (UPS) today.
Or shouldn’t be, however much they’ll spin it as such.
According to the powers that be at UPS, Big Brown has been weighing this move for quite a while.
What move?
Cutting their thirty-year-old ties to delivering for Amazon.
What was a beneficial arrangement for both of them in the beginning is no longer so schweet or advantageous, and UPS is cutting back on both the personnel and facilities they use to handle all those Amazon shipments.
UPS is looking to slash about 20,000 jobs and close more than 70 facilities as it drastically reduces the amount of Amazon shipments it handles.
The package delivery company said Tuesday that it anticipates making the job cuts this year. It anticipates closing 73 leased and owned buildings by the end of June. UPS said that it is still reviewing its network and may identify more buildings to be shuttered.
“The actions we are taking to reconfigure our network and reduce cost across our business could not be timelier,” CEO Carol Tomé said in a statement on Tuesday. “The macro environment may be uncertain, but with our actions, we will emerge as an even stronger, more nimble UPS.”
The UPS CEO said that what the Amazon package contract made up in volume, it didn’t make up in profits for the time spent, and ate away at other, more lucrative opportunities. UPS would be halving its business with the online retailer going forward.
…In January UPS announced that it had reached a deal with Amazon, its biggest customer, to lower its volume by more than 50% by the second half of 2026.
During UPS’ fourth-quarter earnings conference call in January, Tomé said that the company had partnered with Amazon for almost 30 years and that when its contract came up this year, UPS decided to reassess the relationship.
“Amazon is our largest customer but it’s not our most profitable customer,” Tomé said at the time. “Its margin is very dilutive to the U.S. domestic business.”
In its earnings call, UPS also beat analysts’ expectations.
UPS JUST REPORTED EARNINGS $UPS
*UPS Q1 REV. $21.5B, EST. $21.1B
*UPS Q1 ADJ EPS $1.49, EST. $1.41
*UPS TO LAYOFF 20,000 EMPLOYEES DUE TO AMAZON DOWNSIZING PLANS TO SAVE $3.5 BILLION THIS YEAR pic.twitter.com/l4HrUVDJTx
— GURGAVIN (@gurgavin) April 29, 2025
What I meant above by trying to spin this as a ‘Trump’ result is already playing out. Nowhere did the UPS CEO say there were ‘fewer‘ or ‘less‘ Amazon packages coming in at all. She very specifically said that 30 years of Amazon’s power pricing for the volume that UPS delivers hadn’t left much on the bone for the company. So they – UPS – was choosing to reduce the number of Amazon packages they’d be delivering in order to maximize other, more profitable opportunities.
How that translates to Trump’s trade war is only explained in one acronym: TDS
Check the phrasing here. While it’s true that UPS is planning on fewer Amazon deliveries…
UPS on Tuesday announced it is planning to cut 20,000 jobs, part of a cost-cutting effort that’s linked to fewer deliveries from Amazon, its biggest customer. https://t.co/KxVHWXAFGY
— CBS News (@CBSNews) April 29, 2025
…it’s not because of the Trump tariffs, which weren’t even in place in January when this final decision was made. And CBS undercuts its own insinuation in the story. UPS chose to reduce the volume of Amazon packages, even after Amazon offered to increase the volume in order to renew the agreement.
…”These actions will enable us to expand our U.S. Domestic operating margin and increase profitability,” Brian Dykes, the chief financial officer of UPS said during an earnings call on Tuesday morning.
In a Tuesday regulatory filing, UPS said the cuts are in “connection with our anticipation of lower volumes from our largest customer.” The company, which announced $21.5 billion in revenue for this past quarter, expects to save $3.5 billion this year as a result of its consolidation plan.
“Strong” relationship with Amazon
The company in January said it had reached an agreement with Amazon to decrease its delivery volume by more than 50% in the second half of 2026.
“The reduction of package volume from Amazon is something UPS chose to do as we focus on revenue quality, and increase domestic operating margin and profitability,” a UPS spokesperson told CBS MoneyWatch in an email.
Amazon said in an email to CBS MoneyWatch that the company has a “strong working relationship” with UPS and that it had actually offered to increase UPS’ volumes before the delivery company made the decision to reduce its Amazon shipments.
Had UPS accepted the Amazon offer, there would have been more packages, not less. This is such gaslighting.
See how Reuters frames it? ‘Likely‘ lower shipments, implying Trump’s trade war did this to UPS workers.
#Layoffs at $UPS pic.twitter.com/EwWVd6QOCB
— 🤠 Weimar Silver Baron 🤠 (@BankerWeimar) April 29, 2025
Now, the blame for UPS not offering any guidance updates going forward due to uncertainty over the tariffs and the trade brouhaha can most certainly be laid at the feet of the administration. I mean, how could they offer anything when even the administration doesn’t know from one briefing to the next who’s on first?
…UPS said that it wasn’t providing any updates to its previously announced full-year outlook, given current macroeconomic uncertainty. The company previously said that it expected 2025 revenue of approximately $89 billion.
We’ve also got what is rumored to be a big hit to GDP coming, as the trade deficit came in at a whopping -$161B or something equally astonishing.
Importers were getting ready for tariffs by importing more ahead of higher import costs. One reason tariffs will initially collect a much lower amount than later on if they stay put.
— The Investor (@_The_Investor_) April 29, 2025
This fellow explained that everyone front-loaded their orders to beat the tariffs, which has skewed the numbers to a record high.
There are, of course, two schools of thought on that as well. One, the tariffs then don’t bring in as much revenue as initially projected when trade flows again, because we’ve already imported so much ahead of time.
The opposite and rosier opinion is that those front-loaded goods contribute to GDP when they are sold, so it’s a wash, or close to one.
There is a chance GDP prints negative but that will only be because of this huge trade imbalance so easily explained away. Yes, this might persist into Q2 producing a technical recession. However, imports subtract from GDP when they are imported, they add to GDP when they are…
— gggl (@gggl0rgiggles) April 29, 2025
I anticipate a great fight in the comments over this, believe me.
Layoffs hitting the system have been in progress and picking up steam since last year. This is UPS from January 2024.
BREAKING: UPS, $UPS, to cut 12,000 jobs after what its CEO called a “difficult and disappointing” year.
The company has stated that they are looking to cut $1 billion of annual costs.
UPS stock is currently down 6% after the announcement.
Over the last 3 months, layoffs have… pic.twitter.com/zA4Laq9FPL
— The Kobeissi Letter (@KobeissiLetter) January 30, 2024
…Over the last 3 months, layoffs have quickly spread from technology companies to just about every industry.
Shipping is now the latest industry to feel the pain.
And now, if the courts ever get out of it, you’ll have federal workers in the mix to deal with, too.
I’m a starry-eyed optimist as far as setting things right with the world. If anyone can do, this guy can. And no one else would have even tried.
But I don’t want to see everything derailed, either, because of congressional chickenhawks who start to bail, since once they do, you play hell coaxing them back.
Republicans are so good at fighting each other when things look a little bleak.
We’re at the hunnert day mark of the most momentous administrative upheaval in presidential history, and it needs to keep on truckin’.
If there’s one thing the Trump team needs to do, it’s get these deals done – and I mean DONE.
That’s gonna be YUGE.
