GM says Trump tariffs could cost it US$5b, slashes guidance
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The news: Just two days after suspending earnings guidance, General Motors lowered its full-year outlook for 2025 as it gauges the impact of President Donald Trump’s levies.
The numbers: GM said it expects EBIT to fall to between USD10-USD12.5 billion ($15.6-$19.5 billion), a markdown from its January guidance of as much as USD15.7 billion.
Shares in the US automaker were down over 3.5% to USD45.2 per share on Thursday morning.
The context: Having postponed its investor call originally scheduled for earlier this week, GM said that its new guidance includes a current tariff exposure of USD4-USD5 billion. GM said that it expects to offset at least 30% of this exposure, and that it will pause around USD4 billion in planned share repurchases until it has “more certainty” around its operating environment.
A shareholder letter published by GM CEO Mary Barra reads that GM has held continual discussions with the President since his inauguration, and that the company will maintain its “strong dialogue” with the Administration: “As you know, there are ongoing discussions with key trade partners that may also have an impact. We will continue to be nimble and disciplined and update you as we know more.”
GM was one of a series of automakers which reduced or pulled guidance this week, as uncertainty prompted by Trump’s 25% auto tariffs flummoxed car manufacturers’ as they entered reporting season.
The revised guidance comes despite the White House signing orders to soften the impact of the 25% tariffs on autos and auto parts earlier this week, preventing multiple levies from piling on top of each other and creating offsets for US-made vehicles. As GM manufactures a number of its models in Canada, Mexico and South Korea, it will still face 25% tariffs on the imported vehicles.
Harley Davidson also pulled its 2025 outlook on Thursday, citing a lack of clarity around US trade policy and weakening economic conditions. It had previously forecast revenue that would be flat or down 5% this year, and a 7% to 8% operating income margin.
The sources: GM Earnings, Mary Barra Letter
