By Shivansh Tiwary

(Reuters) -FedEx's ( FDX ) shares fell 11% 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 "weakness in the industrial economy" was weighing on its higher-margin business-to-business volumes.

The company's shares hit their lowest in nearly two years on Friday. 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.

After the bell, FedEx ( FDX ) shares were down nearly 2%, UPS shares were down 0.4%, while European peer DHL fell 2.5%.

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.

"Management noted weakness in the industrial economy and, while macro is a factor, we believe structural forces are a far bigger headwind than the market thinks," Morgan Stanley added.

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.

At least 10 brokerages cut their price targets on the company's stock on Friday.

(Reporting by Shivansh Tiwary in Bengaluru, additional reporting by Aatreyee Dasgupta; Editing by Sriraj Kalluvila, Shounak Dasgupta and Mohammed Safi Shamsi)