United Parcel Service Inc (NYSE:UPS) just delivered a warning that global trade turbulence is far from behind us. During the third-quarter earnings call, CEO Carol Tomé revealed that the courier giant's China-to-U.S. trade lane fell sharply as new tariff rules took effect. "We saw an over 20% decline in that trade lane in the third quarter and expect that will continue into the fourth quarter," Tomé said.
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Tariff Turmoil Hits Global Trade Flows
At the center of the disruption is the elimination of the de minimis exemption – a once-obscure trade rule that allowed low-value goods to cross borders without duties. Now, its removal has rippled across shipping networks.
"When the global exemption went into place, you might have seen that some mail systems like Royal Mail or Deutsche Post stopped shipping into the United States," Tomé explained.
The result: customs delays and higher costs for small- and medium-sized exporters.
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Automation Helps, But Can't Undo The Damage
UPS has been racing to automate customs clearance to soften the blow. Packages requiring clearance have surged from 13,000 a day in March to 112,000 daily in the third quarter. Nearly 90% of those are now cleared automatically. Tomé credits this feat to UPS's heavy tech investments.
Still, not every business can adjust as fast. "Some [SMBs] are doing just fine and managing through the changes in trade policy, and some of them candidly are challenged," she said.
The Real Tariff Pain Is Yet To Come
Tomé warned that 2026 could bring an even harsher impact. "We're watching them closely… because next year is when you're going to feel the full brunt of some of these tariffs."
CFO Brian Dykes echoed her caution, calling the shift "a permanent change until the system settles and the new equilibrium on trade flows settles."
UPS expects the tariff fallout to shave up to $100 million off fourth-quarter profits. Or, as Tomé put it with trademark bluntness: "It's complicated. It's super complicated."
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