One of the more notable items from GM’s Q2 2018 earnings was a downward forecast adjustment wherein the automaker expects profits to decline by about $1 billion in 2018 as a result of higher commodity prices. But despite most reports linking the increase in raw material costs to revised trade policies, including new tariffs on imported steel and aluminum implemented by the Trump administration this year, GM doesn’t see the correlation.
In a recent interview with CNBC, GM CFO Chuck Stevens attributed the rise in commodity prices to “market forces”, rather than the tariffs introduced by the Trump administration.
GM CFO Chuck Stevens
GM buys most of its steel domestically, but doing so has not shielded it from higher commodity prices. To that end, GM – along with analysts and economists – believes that increases in domestic commodities prices was caused – in a roundabout way – by the Trump administration’s tariffs on international/imported commodities. The tariffs on imported goods has forced some domestic firms to switch to buying domestically, in turn increasing demand for domestic commodities while supply remains the same, thereby increasing prices in the free market.
“Commodities and tariffs and their interrelationship are weighing. It’s the big picture that’s hitting the outlook”, Efraim Levy, a stock analyst at CFRA Research, was quoted as saying by the New York Times.
GM previously warned the Trump administration that tariffs could have a negative impact on its business. In a filing to the Commerce Department in late June, the automaker said that tariffs could lead to “less investment, fewer jobs and lower wages” and that the cars impacted the most would probably be those directed at consumers who could least afford an increase. In addition, slower demand would require cuts to GM’s production, which “could lead to a smaller GM,” said the company in the statement.
Besides higher commodity prices, headwinds associated with international currency exchange rates in Argentina and Brazil are also part of the reason that General Motors will make $1 billion less in profit this year. Meanwhile, Stevens is set to retire this year after 40 years with GM. He will be succeeded by Dhivya Suryadevara.
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Comments
This is why we need SPACE FORCE!
Every week we get the same anti-Trump yapping from Sean and now Alex.
No wonder you lost to Trump. Except you are obviously too dumb to understand that.
More proof Trump will be re-elected in 2020. Let the Trump Derangement Syndrome overwhelm the sore losers!
Once again, you are blinded by what appears to be a crazed political obsession.
We always report the facts… as we did on this story. In fact, if you opened your eyes and let your brain think for just a few seconds before flying down to the keyboard, you would realize tha this story actually paints the POTUS in a positive light. But you didn’t think and didn’t read… but instead chose to try paint a picture of anti-Trump or anti-whatever, even though there is no such picture.
As a professional journalist, I do worry about people like yourself… not because of any political affiliation, but because of your incessant necessity to want to turn every topic that touches on the POTUS as being either positive or negative, and then to try and smear those who write the stories. Well you may get away with it elsewhere… but not here and not now.
So do yourself a favor and grow up, grow a pair, and stop using a fake user name with a fake email address. I see your IP, and if you pull this shit again, I will ban you faster than you can blink or think.
@congrats
Every day the same triumphalist talk about elections of yesteryear and over next year.
Don’t you think that this endless repetition becomes boring and a nuisance in the end?
Why don’t you voice a comment on what is written in the article?
Space Farce?
Sputnik 🙂
PRESIDENT Trump.
Hillary who?
?
GM and their scare tactics. I work for them and we get the same type of stuff thrown at us. Its never GMs fault it’s always someone else’s. Not only that, theyve already been shrinking since the 1970’s. They want cheap labor overseas to build everything then bring it to the US to sell for profits, sorry boys doesn’t work that way. If it were up to GM they would do everything in 3rd world countries. Gotta keep em honest
is there a company that doesn’t want cheap labor? every company tries to lower cost to increase profits.
Thanks for the comment G99. I’ve been involved as a GM consumer since my dad’s purchase of GM based medical vehicles and personal car in the late 80’s; I’ve got a 92 Astro, 93 K1500, & 17 Spark (outstanding). However, I noticed some recent inconsistency in their statements vs practices in the people/dollar ratio, but am not surprised as wherever money is flowing there is a sinister force to move something legitimate into selfish pursuit. Only such people want “cheap” labor, whereas equitable management shares all net increases with labor especially those directly produced by them.
“was quoted as saying by the New York Times.”
You mean the left-wing Fake News New York Slime???
Lolololololol
It MUST be true if the NYT said so. Lol
I’m taking the author’s journalism as a report and hope he corroborated his data. Though the New York Times have a super-data agenda, that doesn’t necessarily eliminate it as a source. Though I’m a Trump advocate, he’s not God. Also, though the political Left be an adversary, they’re not the Adversary (Satan).
When you are against cheap labor, fight for higher wages, strengthen the unions, bring solidarity for fighting workers, and especially: unionize the South!
THEY WILL ONLY ELEVEN BILLION,NOT TWELVE.
Karma is a b*tch, right GM?
Next time dont put all your eggs in one basket. 96% chance of winning, eh? Lol
And sorry, I have no sympathy for a company that will sell out the American worker and make $17,000 profit per truck. Funny how Toyota and Honda is actually investing in America and not complaining like a bunch of sore losers. Whaaaa!
Is it not the responsibility of a publically held company to make profit and earn dividends for the invested?
If they are looking like they will under perform they have to say something.
As for make it all here. Hey I am all for it but find me a way to pay for it.
I am not thrilled with Chinese parts but I am already paying $50K for a truck taking advantage of lower cost parts how much is it going to cost paying all the UAW benefits?
The bottom line not everything in life is fair and you just have to adapt in this fast changing world.
I lost one job to Mexico but to be honest they did me a favor as I got a better job than I had.
I find this to be of interest as a GM worker for 32 years and retired 25 years I have purchased my last car a 2017 Impala Premier. This is my 87th car from when I was 17 so 60 years but as GM makes $17,000.00 profit on every truck and my Pension is $15,000.00 with no increases from 2008 I do not know how GM will go broke in the next 50 years. I do know from 1960 GM removed 21 opperations out of Canada and went from Manufactoring to assembly only in 1990. What a Move now crying?
The dynamics of the industry have changed since then and will change at an even more accelerated pace… that’s the difference.
GM is hell-bent on trying to get ahead of the curve with autonomous and electric vehicles, two very expensive areas when it comes to research, development, testing and production. Hence you see them taking that profit and reinvesting it into those two areas, which insofar have produced zero return. That’s why the profit is important… and that’s why you don’t see any pension increases. But then again, what company actually increases their retirees’ pensions?
Meanwhile, the profits generated by the trucks are offset by car losses and the development investments I mentioned earlier. So it’s not all gravy for the company This year alone they will make $1 billion less in profits thanks to rising commodity costs and exchange rate issues in South America.
PS: congrats on the Impala. It’s an awesome car!
I worked in Detroit and know GM shut themselves down to get out of Saturn and costs on Pontiac and Oldsmobile and today as Canada had low volumn build on most of those products by building Chev Pont Olds Cadillac and Buick those that owned the Canadian Corporation were able to rotate their build within their plants if that product was not selling as many. The US Corporation would build a line of one product and suffer their Corporate moves and this Idiocy continues because in the 1990s The Bean counters thought it better to purchase from a supplier instead of manufacturing in house that was required. I was there when that became the goal and indicated it would not work. I was told to look at the big picture. This is 2018 and the Educational systmn GM had GMI it trained Engineering and was ahead of the time. Today to rely on US Educated 4 year university cources has been compaired to Canadian Grade school. You Win?
The Trump tax cut saved them about 1.5 billion in 2017. The commodity price increases still puts them ahead.