GM expects up to $5B tariff hit, even after recent relief
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General Motors plant in Canada. Photo: Jorge Uzon/AFP via Getty Images
General Motors expects a tariff impact of $4 billion to $5 billion this year — almost one-third of its expected profits for 2025 — even after President Trump pulled back on some auto levies this week, the company said Thursday.
Why it matters: The warning underscores how much pain American companies may face as Trump uses trade leverage to try to bring back domestic manufacturing.
Driving the news: GM said it will be able to absorb about 30% of the tariff impact by cutting costs and shifting production plants or supply chains.
- It does not plan to pass on the costs to consumers through higher vehicle prices.
Between the lines: GM has already shifted some pickup truck production from Mexico to a plant in Fort Wayne, Indiana, adding 50,000 units to a factory that was already operating on three shifts.
- CEO Mary Barra said GM has additional plans to increase U.S. capacity, but wasn't ready to announce them.
- GM is also working to localize its supply chains by helping suppliers ensure the content of their parts is compliant with the U.S.-Mexico-Canada free trade agreement.
- It's also assembling more battery modules in the U.S., rather than in Mexico or Canada, which is a relatively inexpensive way to boost GM's U.S. content, Barra said.
By the numbers: GM trimmed its earnings guidance for 2025 after getting some clarity this week from the White House on where automotive tariffs will settle.
- It now expects adjusted earnings before interest and taxes of $10 billion to $12.5 billion, down from a previous estimate of $13.7 billion to $15.7 billion.
- Notably, GM said it will continue investing in the growth of its business, making no change to its planned $10 billion to $11 billion capex for the year.
What they're saying: Barra struck a confident and cooperative tone during an investor call Thursday as she described GM's ongoing discussions with the Trump administration.
- "We understood from early discussions that he had a very strong goal to strengthen the U.S. auto industry," she said. "So we haven't thought of this as a chaotic environment."
- GM is aligned with Trump's goals and is adapting to changing policies, she said.
What to watch: GM, which imports hundreds of thousands of vehicles from South Korea, Mexico and Canada, is keeping a close eye on Trump's trade talks with those nations, which could potentially lower the size of its tariff hit.
- "We look forward to maintaining our strong dialogue with the Administration on trade and other policies as they continue to evolve," she said in a shareholder letter.
Editor's note: This story has been updated with new details from GM.
