3 hours ago
3
McDonald’s and General Motors have warned that uncertainty around Donald Trump’s tariff policy is hurting business, hitting sales and knocking profits.
The fast-food chain reported a 3.6% fall in sales in its US home market during the first quarter, driven mainly by lower customer numbers as consumers reined in their spending in the face of an unpredictable economic outlook.
It was the largest quarterly fall in sales since the Covid lockdowns of 2020, and comes as US measures of consumer confidence plummeted in March and April.
McDonald’s chief executive, Chris Kempczinski, said the company was navigating the “toughest of market conditions” as it also reported a surprise 1% fall in global sales in the first three months of the year.
“Consumers today are grappling with uncertainty,” Kempczinski added.
The company, headquartered in Chicago, has been trying to boost consumer spending on its Big Macs and chicken McNuggets through the launch of a new “value” menu.
Also on Thursday, GM, one of the “big three” Detroit carmakers, cut its profit guidance for the coming year, and cautioned that Trump’s tariffs could cost it as much as $5bn (£3.8bn) in 2025.
The carmaker said it was exposed to the costs even after Trump’s announcement that he would scale back some of the duties on foreign cars and parts. The move was designed to give a reprieve to US carmakers, after the domestic industry warned his strategy would increase costs for American manufacturers by tens of billions of dollars.
Carmakers subject to a 25% tariff on imports will now not be subject to other levies Trump has imposed, such as those on steel and aluminium. US carmakers will also be allowed to apply for temporary tariff relief on a proportion of the costs imposed for imported parts, although the relief will be phased out over the next two years.
Mary Barra, GM’s chief executive, said in a letter to shareholders that the company now expected to make a pre-tax profit of between $10bn and $12bn this year, including a tariff exposure of between $4bn and $5bn. This compares with previous profit guidance of $13.7bn to $15.7bn.
Despite the significant hit to profitability from tariffs, Barra’s letter stated the company was “grateful to President Trump for his support of the US automotive industry”.
“We look forward to maintaining our strong dialogue with the administration on trade and other policies as they continue to evolve,” Barra wrote.
Carmakers have been struggling to keep up with Trump’s frequent changes to his plans for sweeping levies, which have also forced Stellantis – the owner of brands including Jeep, Chrysler and Fiat – and German manufacturer Mercedes to withdraw their financial guidance for the year as a result of the uncertainty around tariff policy.
after newsletter promotion
GM and the other two big Detroit carmakers, Stellantis and Ford, have significant manufacturing facilities in Mexico or Canada which serve the US market, prompting analysts to caution that the trio could be most vulnerable to Trump’s tariffs. Under free trade agreements, which have been in place for decades, parts and cars can crisscross that border many times.
Companies across a range of sectors have been struggling to keep up with changes to tariff policy announced by the Trump White House, which threaten to upend global supply chains and disrupt markets.
Uncertainty and abrupt policy U-turns also appear to be weighing on US consumers, while other hospitality businesses including Starbucks, Domino’s Pizza and Chipotle Mexican Grill have warned that Americans are cutting back on dining out.
It came as official figures showed that the US economy shrank by 0.3% between January and March, down from growth of 2.4% in the final quarter of 2024 and the first contraction since the start of 2022.
US consumer sentiment plunged by 32% to its lowest level since the 1990 recession between January and April, after the announcement of Trump’s tariffs sparked fears of a global trade war. The index of consumer sentiment score is based on a monthly survey asking Americans about their financial outlook.
