The year 2025 has been a tumultuous one for the US auto industry, with changing trade policies causing significant upheaval, with General Motors (GM) coming under pressure with a $5 billion impact in added costs.
The Trump administration's proposed tariff modifications have left automakers in a state of uncertainty as they wait for clarity on how these changes will impact their operations. The policies, designed to protect US manufacturers, have introduced new uncertainties for companies that rely on the global supply chain.
The US automotive giant, General Motors (GM), in January, pulled its financial outlook just two days after posting it due to the unpredictable nature of the proposed trade policies. Now, the company has released a revised profit outlook, lowering its expectations in light of guidance from President Trump.
GM, the company behind well-known brands such as Chevrolet, Buick, and GMC, has announced a cut in its outlook for revenue and profit in 2025. This decision is based on the potential costs of auto-related tariffs.
GM's Revised Financial Outlook
The automaker now estimates its adjusted operating profit will fall between $10 billion and $12.5 billion, a significant decrease from its previous estimate of $13.7 billion to $15.7 billion. This updated estimate assumes that tariffs will impact corporate balance sheets, with losses estimated at between $4 billion and $5 billion.
In a letter to shareholders, GM CEO Mary Barra shared these updates and informed them that the automaker is maintaining open communication with the current administration during trade discussions. She also noted that negotiations with top trading partners remain open and could further impact the company's performance.
Previously, GM had released an outlook through January 2025 that did not account for the effects of new tariffs. This version was removed earlier in the week, and the company has now replaced it with a more realistic view, taking into account recent policy changes.
GM's Strategy Amid Tariff Changes
For the current year, net income is now expected to range from $8.2 billion to $10.1 billion, down from the previous estimate of $11.2 billion to $12.5 billion. Barra also mentioned that talks with other countries could impact GM's long-term plans.
In response to the impact of tariffs, GM has begun to take measures to mitigate the new costs. According to Chief Financial Officer Paul Jacobson, the company plans to offset at least 30% of the new costs. Since the presidential election, teams at GM have been working to build stronger domestic supply chains. These efforts are ongoing, and the company is also exploring ways to reduce spending across its departments.
One of the strategies GM is employing is working with suppliers to increase the volume of US-made parts in its vehicles. This move is designed to comply with trade agreement rules from the USMCA. Barra stated that expanding production of U.S.-made battery modules is a smart and cost-effective move that supports this goal.
Despite these challenges, there are signs of strong consumer demand for its brands like Chevrolet. GM recorded its strongest April since 2007 with a 20% increase in retail sales. Ford Motor reported a 16% increase, while other automakers also witnessed gains. It seems that before tariffs drive up prices even further, shoppers are making purchases.
