The shares of General Motors have tumbled Wednesday after the largest U.S. automaker cut its profit outlook for the year considering the higher costs for raw materials and unfavorable foreign exchange rates in South America. The prices of Steel and and aluminum have been on the rise since the Trump administration has imposed tariffs on the auto industry’s two key raw materials.

The automaker, however, now expects to earn about $6 per share in 2018, down from its previous forecast of $6.30 to $6.60 a share. GM shares were down more than 6 percent in early trade.

On Wednesday, Fiat Chrysler also cut its outlook for the year and its shares were down more than 8 percent before the market’s open. Ford has reported that after the market closes on Wednesday was down close to 3 percent.

At its earnings release, General Motors said, “Recent and significant increases in commodity costs and unfavorable foreign exchange impact of the Argentine peso and Brazilian real have negatively affected business expectations.” It was also added that it “anticipates these headwinds will continue” through 2018, headwinds will cost it $1 billion this year.

Investors are focusing on the impact of higher commodity costs as a trade war escalates. On Tuesday, the shares of Whirlpool plunged after the U.S.-based washing machine maker said higher cost of steel will crimp its profits this year.

In the second quarter, General Motors said that the net income rose more than 40 percent to $2.39 billion, but from its continuing operations, profits fell slightly from a year earlier.

On an adjusted basis, which strips out one-time items, GM earned $1.81 per share, which was higher than the $1.78 per share expected by analysts surveyed by Thomson Reuters.

Revenue in the three months ended in June came in at $36.76 billion, slightly higher than estimates, but down 0.6 percent from a year earlier.

General Motors reported that the U.S. demand rose for high margin SUVs and trucks with vehicle deliveries rising 4.6 percent to 758,000 in the three months ended in June. The automaker had cited a strong economy behind an increase in sales. Its Chevrolet and GMC pickups and large SUVs were up 21 and 22 percent, respectively.

The China related deliveries of General Motors increased to an all-time high of 858,000 in the second quarter, as reported.

The company will be holding an earnings call with analysts at 10 a.m. Investors are looking forward to hear more about the impact of tariffs imposed and proposed by the Trump administration. Automakers have said that tariffs could drive up vehicle costs and lead to job cuts. However, it its earnings release, GM did not mention the tariffs.

Both Ford’s and GM’s stock prices have lagged the broader market, with GM shares down 3.7 percent this year and Ford’s down more than 15 percent, compared with the S&P 500’s gain of more than 5 percent.

Mia Noles
Mia Noles is a writer at the Ode Magazine. She holds a Bachelor of Arts English Literature Degree from Leeds University. Her specialty is Celebrity News, History, and World News. She is also a life enthusiast who loves traveling the world and taking part in humanitarian courses. You can contact her at


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