UPS to Remit $5B in Tariff Refunds as It Shifts Away from Amazon
UPS expects to remit over $5 billion in tariff refunds, having applied for nearly $500 million covering 2.5 million entries, and reaffirmed full-year revenue guidance of $89.7 billion with a 9.6% operating margin despite rising fuel surcharges. UPS cut Amazon volume to 8.8% of revenue and reduced 7,500 drivers for higher-margin premium shipments.
1. Tariff Refund Process
UPS is coordinating with U.S. Customs & Border Protection to process refunds after the Supreme Court struck down IEEPA tariffs. The company has applied for nearly $500 million covering 2.5 million entries and has processed 16 million tariff entries overall, expecting to remit over $5 billion back to customers within 60–90 days of approval.
2. Strategic Shift from Amazon
UPS has intentionally reduced its Amazon volume from over 13% to 8.8% of total revenue, eliminating 500,000 daily Amazon pieces and reducing 7,500 drivers through its voluntary Driver Choice program. This pivot frees capacity for higher-margin segments such as healthcare, B2B and small-business shipments, supported by the closure of 23 underutilized buildings to right-size its network.
3. Financial Outlook and Cost Reductions
The company reaffirmed full-year revenue growth of 1.1% to $89.7 billion and an adjusted operating margin of 9.6%, with diluted EPS expected to be flat. Fuel surcharges have risen to 27% on domestic ground and 29.25% on air to cover elevated oil costs, while a $3 billion cost-out target remains on track thanks to automation investments and network reconfiguration.