General Motors shares tumbled Wednesday after the largest U.S. automaker cut its profit outlook for the year, citing higher costs for raw materials and unfavorable foreign exchange rates in South America. Steel and and aluminum prices have been on the rise since the Trump administration imposed tariffs on the auto industry’s two key raw materials.
The automaker 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 8 percent in early trade.
Rival Fiat Chrysler on Wednesday also cut its outlook for the year and its shares were down more than 11 percent. Ford, which reports after the market closes on Wednesday, was down close to 4 percent.
“Recent and significant increases in commodity costs and unfavorable foreign exchange impact of the Argentine peso and Brazilian real have negatively affected business expectations,” GM said in its earnings release, adding 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, shares of Whirlpool plunged after the U.S.-based washing machine maker said higher steelcosts will crimp its profits this year.