Trump's Tariffs: GM, Harley-Davidson, and McDonald's Feel the Heat
Companies GM and Harley-Davidson are making adjustments to their projected earnings.
Let's dive into the turmoil caused by the US President's trade policies, as the likes of GM and Harley-Davidson are already revising their profit predictions. Even the burgers at McDonald's haven't escaped the chaos.
The US trade and tariff policies under President Donald Trump are leaving their mark on US businesses, with carmakers GM and motorcycle manufacturer Harley-Davidson, and fast-food behemoth McDonald's bearing the brunt. GM's balance sheets have suffered from the tariffs, while McDonald's is feeling the economic jitters affecting customers.
GM Hits the Brakes
GM forecasts billions in additional costs due to US tariffs. Regardless of the recent easing of tariffs on imported car parts, the company still anticipates forkting over $4 to $5 billion, according to a letter from CEO Mary Barra to shareholders. That's a slap in the face of the automaker's previous projection of up to $15.7 billion in operating profit.
Harley-Davidson's Ride Gets Rough
In light of the "uncertain global tariff situation and macroeconomic conditions," Harley-Davidson has revised its 2025 financial outlook. The company's Q1 results surpassed expectations in many areas, but US retail sales were weaker than expected, according to Harley-Davidson officials. Looking to navigate the tumultuous economic and tariff landscape, the company has announced efforts to improve cost productivity, streamline its supply chain, controls operating costs, and reduce dealer inventory.
McDonald's Struggling to Take Orders
The economic uncertainty among consumers continues to ding McDonald's sales. First-quarter same-store sales dropped by 1% compared to the same period the previous year. According to CEO Chris Kempczinski, the market conditions have been the toughest they've seen in quite a while.
McDonald's also pointed to the absence of a leap day in February 2024 as a factor in the dip. In the US, the decline was particularly severe, at 3.6%.
On a consolidated basis, revenues dropped by 3% to $5.96 billion (around $5.3 billion) and operating income declined by 3% to $2.65 billion. Net income amounted to $1.87 billion, down from $1.93 billion the year prior.
Best of luck to the companies facing the stormy waters ahead!
- General Motors
- Harley-Davidson
- McDonald's
- USA
- Donald Trump
- Tariffs
- Profit Forecast
Enrichment Data:For a closer look at the potential consequences of potential tariffs for these companies:
1. General Motors
The tariff policy could impose billions in additional costs on GM due to higher input costs, which might reduce sales competitiveness across global markets and upset supply chains[1]. This could translate to higher consumer prices, diminishing US manufacturing competitiveness in international markets[1].
2. Harley-Davidson
While it's not explicitly stated in the article, historical precedent (e.g., EU retaliatory tariffs during the Trump administration) hints that motorcycle manufacturers could face export challenges and margin pressures if tariffs escalate. In the past, tariffs compelled Harley to relocate production overseas to dodge EU levies, a tactic that could resurface[1].
3. McDonald’s
Fast-food chains like McDonald's are typically less directly impacted by tariffs. However, trade uncertainty may have secondary effects on consumer spending patterns and supply chain costs[1]. Furthermore, tariffs could potentially drive broader economic slowdowns, causing consumers to cut back on discretionary spending, which would indirectly affect companies like McDonald's margins.
Tariff CasualtiesThe report hints that tariffs could reshape supply chains, curb cross-border investment, and instigate retaliatory measures, especially in highly integrated industries like automobiles[1]. For consumer-facing industries, the ripple effects of reduced discretionary spending and economic slowdown could emerge if tariffs have a broader impact.
- The United States trade and tariff policies under President Donald Trump have led to additional costs for General Motors, forecasted to be between $4 to $5 billion, due to increased input costs from tariffs.
- Harley-Davidson has revised its 2025 financial outlook due to the "uncertain global tariff situation and macroeconomic conditions," citing weaker-than-expected US retail sales.
- The economic uncertainty among consumers has negatively affected McDonald's sales, with Q1 same-store sales dropping by 1%, and a particularly severe decline of 3.6% in the US.
