In a shockwave move through the logistics industry, United Parcel Service (UPS) announced that it would be cutting its workforce by 12,000 employees within the next two years, and another 8,000 positions may be impacted through voluntary separation and attrition. The company specifically cited the cost burden on it through tariffs during the Trump administration, which continues to influence global trade flows. The announcement is to highlight how policy actions by past administrations have lasting impacts on the operations of companies and labor markets.
The Tariff Environment: Trade Wars and Implications
The 2018-2019 trade war of the Trump presidency against China included U.S. tariffs on more than $350 billion worth of Chinese imports, from electronics to machinery. While aimed at bolstering home-country manufacturing and rebalancing trade, the actions provoked retaliatory tariffs from China and other trading countries, raising costs for firms that depended on foreign inputs. While some tariffs were reversed after 2020, others persist, imposing a chronic drag on industries linked to global supply chains.
For UPS, a firm that earned 18% of its 2022 revenue from international shipping, the tariffs rearranged trade flows overnight. As firms rushed to skirt levies by importing goods from other countries such as Vietnam or Mexico, shipping volumes disintegrated and became more difficult to predict. U.S. exporters, meanwhile, encountered retaliatory barriers, lowering demand for export logistics services. “The tariffs caused our customers to rethink their entire supply chains,” UPS CFO Brian Newman said on a recent call. “The volatility made it challenging to predict demand, and we’re still recovering from the effect.”.
How Tariffs Pinched UPS’s Bottom Line
UPS’s international business, its growth driver, saw 5% year-over-year revenue and 18% operating profit fall in Q4 2023. Tariffs were the primary cause, the company explained, stating that several manufacturing customers cut cross-border volumes to offset the cost. For instance, importers of auto parts—a big UPS customer segment—were subjected to 25% tariffs under Section 301, prompting some to relocate production to Europe. This diversion cut into UPS’s high-margin international freight volumes.
Locally, the tariffs were also hurtful. Small- and mid-sized businesses (SMBs), who account for almost 30% of UPS’s US ground volume, reduced inventory orders as importing Chinese-produced components became pricier. “Our tech and retail customers began ordering less frequently in larger quantities in a bid to offset tariff cost,” a UPS operations manager, who wished not to be named, explained. “That adjustment decreased our typical delivery volumes, which are more profitable than bulk deliveries.”
Layoffs and Labor Backlash
The reductions, starting in late 2024, will fall heavily among warehouse employees, administrative staff, and mid-management ranks. UPS went out of its way to say that frontline delivery drivers—a pandemic-fueled e-commerce bonanza-swelled ranks—would largely be exempt. The Teamsters union, which represents over 340,000 UPS employees, criticized the move as “corporate greed masquerading as necessity.”
“UPS made $9.9 billion in profits last year,” Teamsters General President Sean M. O’Brien said. “Rather than penalizing workers, they should be investing in the people who power this company.” Union officials contend that UPS is blaming tariffs for driving up investments in automation, including artificial-intelligence-based logistics platforms and robotic sorting centers.
Political Reactions and Economic Implications
The layoffs have reignited doubts about the success of Trump’s trade policy. Economists point out although tariffs protected some U.S. sectors, they hurt disproportionately sectors that were banking on low-cost imports. “Logistics companies like UPS have extremely thin profit margins,” said trade analyst Linda Bradford of the Cato Institute. “Even minor increases in cost can require drastic measures, including laying people off.”.
Political figures have pounced on the news. Democratic legislators condemned the tariffs as a “failed experiment,” but Republicans defended them as a move towards less reliance on China. Former President Trump, seeking reelection in 2024, ridiculed UPS’s claims, stating, “Strong trade policies save American jobs. UPS’s problems are created by bad management, not tariffs.”
The Human Cost: Workers Bracing for Uncertainty
For workers such as Maria Gonzalez, a 10-year UPS warehouse manager in Ohio, the news has been unsettling. “I’ve weathered three rounds of reductions already,” she said. “But this is different. They’re cutting people who have worked here for decades.” Regional economies in UPS hub cities such as Louisville and Atlanta also might be hurt, as layoffs cut disposable income and tax revenues.
Looking Ahead UPS CEO Carol Tomé said the cuts represent “a painful but necessary step to adjust to today’s trade realities.” The savings will be invested in automation and expansion of its healthcare logistics business, a unit less exposed to tariff volatility. However, critics warn that UPS’s reliance on cost-cutting over innovation could backfire. “The logistics industry is evolving rapidly,” said supply chain expert David Simchi-Levi of MIT. “Companies that prioritize efficiency over resilience risk falling behind when the next disruption hits.” As UPS undergoes this shift, its cuts are a sobering reminder of how geopolitical decisions cascade through the economy—and alter lives years after the headlines have faded.