General Motors revised its full-year financial forecast and said the auto tariffs put in place by Pres. Donald Trump could cost it as much as $5 billion this year – despite the White House move this week to offer automakers some modest relief. As a result, it expects to see sales, revenues and net income fall sharply when compared to its original forecast for 2025. More from Headlight.News.
GM CFO Paul Jacobson said the company’s earnings will be hit by tariffs.
General Motors expects to take a multi-billion-dollar hit from Pres. Donald Trump’s automotive tariffs, even after the president announced this week steps meant to temporarily ease the burden of those trade sanctions on the auto industry.
The automaker originally planned to update its full-year guidance on earlier this week, at the same time it reported net income fell to $2.8 billion during the first quarter of this year, while revenue rose 2.3 percent to $44.02 billion. Profits in the North American market were down 14%, even though tariffs had not yet taken effect.
At that time, GM Chief Financial Officer Paul Jacobson said, ““We believe the future impacts of tariffs could be significant, so we are reassessing our guidance.” The automaker on Thursday confirmed that Trump’s trade war will, indeed, have a significant impact.
The new forecast
Pres. Trump made several stops in Detroit Tuesday, including one at a national guard base.
The industry at large has struggled to fully understand the details of Trump’s auto tariffs, as well as other trade sanctions that impact the industry, including tariffs on imported aluminum and steel. That led GM to initially delay its earnings call scheduled for Tuesday.
The latest revisions to the tariff plan have not made things easier, but GM did announce Thursday revised guidance for the year, with the automaker saying it expects to have a tariff exposure of $4 billion to $5 billion for all of 2025.
As a result, it now anticipates an annual adjust core profit of somewhere between $10 billion and $12.5 billion. The previous, pre-tariff forecast was between $13.7 billion and $15.7 billion.
In terms of net income, GM now expects to generate between $8.2 billion and $10.1 billion, compared to an earlier forecast of between $11.2 billion and $12.5 billion.
Tariff changes
GM’s earnings will fall sharply due to tariffs.
Since taking office on January 20, the president has rolled out an array of new tariffs, but has since delayed, canceled or revised many of those sanctions – such as one covering imported computers and cellphones.
The automotive industry faced the prospect of “stacking” tariffs, such as those covering imported autos and parts, as well as the steel and aluminum tariffs.
On the same day Trump visited suburban Detroit to mark his 100th day in office, the president signed orders offering some relief from stacking. He also approved a process for automakers to apply for reimbursement for a percentage of the tariffs covering imported parts – but only on vehicles assembled in the United States. The reimbursement will phase out after two years.
In a letter to shareholders released Thursday morning, GM CEO Mary Barra cited “the positive impact of the Administration’s action this week.” She also said the white House has “invested the time to understand what it takes to b successful in this capital-intensive and highly competitive global industry.”
More Industry News
- Stellantis Takes Earnings Hit, Expects More Trouble as Tariffs Take Bite
- Trump Gives Some Tariff Relief to Automakers
- GM Reports Q1 Earnings
Not far enough
While Barra and several other automotive leaders praised the president for revising his tariff plans, several told Headlight.News on background that they still see the industry taking a significant hit this year – and likely for a number of years to follow.
Estimates run as high as 2 million fewer new vehicle sales this year, in part depending on how much of the cost of tariffs automakers ultimately will pass onto consumers.
A number of manufacturers, including Mercedes, Hyundai and Kia, have announced they will not pass on tariff costs. In most cases, however, those plans only run to June – and analysts believe most of the vehicles that will be sold by then would already have been in inventory, so not subject to tariffs, anyway.
0 Comments