GM sees $5bn tariff impact in revised 2025 profit forecast

Detroit — General Motors (GM) cut its 2025 profit forecast on Thursday after receiving some clarity and a reprieve from the White House this week on automotive tariffs.

CEO Mary Barra told shareholders in a letter that the company would maintain dialogue with the Trump administration on trade and other policies as they evolve.

“There are ongoing discussions with key trade partners that may also have an impact,” Barra said.

The Detroit automaker released the forecast two days after withdrawing a previous one issued in January that did not take into account the automotive tariffs, and after the Trump administration made changes to them.

Shares of the company were up about 1% in morning trading.

The automaker expects an annual adjusted core profit $10bn-$12.5bn, including a current tariff exposure of $4bn-$5bn. The exposure includes about $2bn on the more affordable vehicles GM imports from South Korea, where it makes entry-level Chevrolet and Buick models, CFO Paul Jacobson told analysts on a Thursday call.

The automaker’s new guidance assumes it can offset at least 30% of the tariff costs, Jacobson said.

“Since the election, our manufacturing and supply chain teams have been focused on developing strategies to help mitigate the impact of potential tariffs,” Jacobson said. “These strategies are now being put into action ... we’ll take additional mitigation measures, including cost reduction targets, where it makes sense to do so.”

To help mitigate tariff impact, GM is working with suppliers to further increase their US content for higher levels of compliance with the US-Mexico-Canada Agreement, Barra told analysts. The automaker is also increasing production of its US-made battery modules, which Barra said is a “low-cost way to increase US content”.

“Alongside these actions, we are scrutinising our discretionary spending everywhere,” she said.

GM’s previous guidance for earnings before interest and taxes was $13.7bn-$15.7bn.

It expects to earn annual net income of $8.2bn-$10.1bn, down from its prior range of $11.2bn-$12.5bn.

GM anticipates 2025 full-year capital spending will be $10bn-$11bn.

Further plans

In an interview with CNBC Thursday morning, Barra said the company expected to make further announcements on plans to increase US production.

“We are making a commitment that we are going to bring more production back to this country to build on what we already have,” Barra said.

Barra also said the company is “assuming a pricing environment that’s similar to what it is today,” even though industry estimates find new vehicle prices could increase by thousands of dollars under tariffs.

Trump’s 25% vehicle tariffs took effect at the beginning of April. After weeks of automakers lobbying for leniency, the Trump administration announced measures this week to alleviate some of the tariff costs while the companies work on increasing their US footprints.

The changes allow automakers to offset tariffs for imported auto parts used in US-assembled vehicles.

Additionally, the vehicles and parts would no longer be subject to Trump’s other tariffs, including 25% levies on steel and aluminium, as well as 10% duties applied to most other countries.

The tariffs also led GM’s crosstown rival Stellantis, which makes Jeeps and Ram trucks, to withdraw its guidance on Wednesday.

Still, executives have seen new-vehicle sales increase with consumers rushing to buy before tariffs affect prices. Ford on Thursday reported a 16% sales increase in April. GM on Tuesday said it saw a 20% sales increase in the month, marking the best April for retail sales, or sales to individual customers, since 2007.

Reuters