By Shivansh Tiwary

(Reuters) -FedEx's ( FDX ) shares fell 8% premarket on Friday after the parcel delivery firm cut its annual forecasts, fanning worries about the health of U.S. manufacturing amid uncertainty from the Trump administration's sweeping tariffs on trading partners.

CEO Raj Subramaniam warned a day earlier that the company was navigating a very "challenging operating environment" and that "weakness in the industrial economy" was weighing on its higher-margin B2B volumes.

FedEx ( FDX ) and rival UPS are viewed as barometers for the global economy due to their involvement across a swathe of industries.

Shipments from companies that produce goods used in manufacturing drive substantial cargo volumes and high-margin deliveries for the delivery firms.

UPS' shares were down about 1.5%, while European peer DHL fell 2.3%.

U.S. President Donald Trump's on-and-off import tariffs have created uncertainty for businesses, prompting them to be more cautious with their spending in an uncertain economic landscape.

Analysts have said Trump's levies could trigger a recession and a trade war, further hammering demand for transportation and delivery services.

"FedEx's ( FDX ) Q3 print and full-year forecast cut will likely exacerbate concerns of structural pressures in the parcel business," Morgan Stanley said, adding that it may even overwhelm the company's cost-cutting program.

FedEx ( FDX ) has been reducing costs as demand for lower-margin e-commerce deliveries from companies such as Temu and Shein outpaces higher-margin business-to-business shipments.

The company lowered its fiscal 2025 adjusted earnings per share forecast to between $18.00 and $18.60, from $19 to $20 previously.

The forecast cut itself was far from a surprise, but the magnitude, particularly for one remaining quarter, was greater than feared, Evercore ISI said.

FedEx ( FDX ) also expects revenue for the 12 months ending May to be flat to slightly down year-on-year, versus its earlier forecast for it to be about flat.

(Reporting by Shivansh Tiwary in Bengaluru; Editing by Shounak Dasgupta and Sriraj Kalluvila)