McDonald and General Motors warn that uncertainty over Donald Trump’s tariff policy is hurting businesses, hitting sales and knocking profits.
The fast food chain reported a 3.6% decline in sales in the US housing market in the first quarter. This was driven primarily by a decline in customer numbers as consumers curtailed spending in the face of an unpredictable economic outlook.
This is the largest quarterly decline since Covid Lockdowns in 2020, as consumer trust measures plummeted in March and April.
McDonald’s CEO Chris Kempinski said the company was navigating “the most demanding market conditions” as it reported that it surprised its global sales fell by 1% in the first three months of the year.
“Consumers today are tackling uncertainty,” Kempczinski added.
The Chicago-based company is trying to boost consumer spending on big macs and chicken mc nuggets through the launch of a new “value” menu.
Also on Thursday, GM, one of the “Big 3” Detroit car makers, warned that Trump’s tariff could cost $5 billion (£3.8 billion) in 2025, cutting profit guidance for next year.
The automaker said Trump was also exposed to costs after the announcement that it would reduce some of its foreign car and parts obligations. The move was designed to give US automakers a reprieve after domestic industries warned that his strategy would increase American manufacturers’ costs by hundreds of billions.
Automakers subject to a 25% tariff on imports are not subject to other Trump-imposed taxes, such as steel or aluminum. US automakers will also be allowed to apply for temporary tariff relief at the percentage of costs imposed on imported parts, but relief will be phased out over the next two years.
GM CEO Mary Bala said in a letter to shareholders that she expects pre-tax profits to be between $1 billion and $12 billion this year. This is compared to previous profit guidance of between $13.7 billion and $15.7 billion.
Despite taking a major blow to profitability from tariffs, Barra’s letter said the company “affirms President Trump for his support for the US automotive industry.”
“We look forward to maintaining a strong dialogue with the administration on trade and other policies.
The automaker has struggled to keep up with Trump’s frequent changes to his plans to sweep taxes that Stellarantis, the owners of brands including Jeep, Chrysler and Fiat, and Mercedes, German maker, have forced him to withdraw his annual financial guidance as a result of uncertainty over tariff policy.
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GM and two other Detroit car makers, Stellantis and Ford, have important manufacturing facilities serving the US market in Mexico or Canada, urging analysts to warn the trio that they may be the most vulnerable to Trump’s tariffs. Under the free trade agreements that have been introduced for decades, parts and cars can be adjacent many times.
Companies from various sectors are struggling to keep up with changes to tariff policy announced by the Trump White House, threatening to overturn global supply chains and disrupt markets.
While uncertainty and sudden policy U-turns also appear to be squeezing US consumers, other hospitality businesses, including Starbucks, Domino’s pizza and Chipotor’s Mexican grill, have warned that Americans are cutting back on their diet.
Official figures show that the US economy has contracted 0.3% between January and March from its 2.4% growth in the final quarter of 2024 and its first contraction since its inception in 2022.
US consumer sentiment plunged to 32% lower levels since the recession between January and April 1990, after Trump’s tariff announcement sparked the fear of a world trade war. The consumer sentiment score index is based on a monthly survey asking Americans about their financial outlook.