America’s largest automaker, General Motors (GM) says tariffs on imported cars imposed by the Trump administration will this year cost the company between $4 billion and $5 billion. CEO Mary Barra told CNN in an interview that the company has downsized its earnings guidance as the tariffs will eat into its profitability. This comes as the Trump tariffs have unsettled investors, nations, and everyday Americans, with major stock indices closing out a volatile April. General Motors has lowered its profit target According to CNN , the estimated tariff cost resulting in the lower profit target was brought to light in a letter from Barra to shareholders on Thursday. The letter and guidance were delayed from their original scheduled release on Tuesday when GM reported lower Q1 earnings and awaited tariff changes from the Trump administration. Barra’s letter revealed that GM now expects adjusted earnings before interests and taxes of between $10 billion and $12.5 billion this year, a decline from the $14.9 billion recorded last year and less than the guidance it gave in January before the tariffs were announced. Despite the downgrading of its earnings projections and anticipating the adverse impacts of the tariffs, the company has indicated it does not expect to shoulder its customers with extra costs in the form of price increases. “We believe …pricing is going to stay at about the same level as it is,” she said on Thursday. “Pricing changes in our industry at least monthly, and sometimes more frequently. We’re going to respond to the market.” – Barra. As a result of the lower earnings guidance, GM is pausing its plans to spend additional billions purchasing its stock, a move it announced on Tuesday. The lower profits will not only hurt GM’s investors, but there are also about 145,000 members of the United Auto Workers union who normally get profit-sharing payments annually. In 2024, they reportedly got record payments of $14,500. The tariffs have had a knock-on effect on many fronts, and new data that came out on Wednesday showed that US GDP unexpectedly contracted in Q1 as recession fears abound. Several other big companies have expressed concerns and lowered their earnings projections due to the impact of tariffs. GM faces tariff challenges on many fronts According to CNN, the auto industry has been a central target of Trump’s tariff efforts. Levies are already in place on most imported automobiles, and tariffs are coming this Saturday on many of the imported parts used to build cars at American factories. As for GM, it’s no longer the dominant global auto player but remains the largest in the US. In 2024, it recorded sales of 2.7 million cars and trucks. The car-making firm recorded a net income of almost $12 billion. According to Barra’s letter, one million workers in the US depend on GM either as employees, suppliers or dealers, with 50 US manufacturing plants and parts facilities in 19 states. The company is in a fix as it faces tariffs on many fronts. GM builds cars and trucks in Mexico and Canada, where, according to S&P Global Mobility, it produced almost a million vehicles in those two countries last year. The company also imported over 400,000 vehicles from South Korea last year, and all imported cars now face a 25% tariff after Trump signed an executive order, although the Canadian and Mexican tariffs can be reduced by credits for American and Canadian-made parts. Additionally, all the 1.7 million cars and trucks the company made in the US in 2024 depended on imported parts to some degree. An estimate from the American University Kogod School of Business says GM’s US-built cars have American parts making up an average of 54% of their content. Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More
