GM slashes 2025 outlook, citing $5 billion hit from Trump tariffs
Pranjal Chandra | May 01, 2025, 22:56 IST
( Image credit : AP )
General Motors has lowered its 2025 financial outlook. This revision is due to President Donald Trump's auto tariffs. The company anticipates a significant financial impact. Earnings and cash flow forecasts have been reduced. GM is working to mitigate these effects. They are focusing on strengthening their supply base. The company is also pushing for electric vehicle profitability.
General Motors on Thursday revised its 2025 financial forecast sharply downward, citing a projected $4 billion to $5 billion impact from President Donald Trump’s recently enacted auto tariffs. The announcement comes as Detroit automakers scramble to adapt to a volatile trade environment that could reshape global supply chains and vehicle pricing strategies.
GM now expects adjusted earnings before interest and taxes (EBIT) to range from $10 billion to $12.5 billion, a significant drop from its previous guidance of $13.7 billion to $15.7 billion. Likewise, net income is forecast between $8.2 billion and $10.1 billion, down from $11.2 billion to $12.5 billion.
The company also trimmed its automotive free cash flow guidance to $7.5 billion to $10 billion, down from up to $13 billion.
Despite the financial drag, GM CEO Mary Barra told investors the company remains fundamentally strong and is actively mitigating the impact.
Barra pointed to long-term efforts to “re-shore” production, highlighting a 27% increase in U.S.-sourced parts since 2019. She suggested that having 11 large U.S. assembly plants gives GM flexibility to add capacity domestically, avoiding costlier greenfield investments.
Still, she declined to say whether the company would shift production away from Mexico or raise vehicle prices to offset costs.
GM CFO Paul Jacobson told investors that while the company believes it can offset at least 30% of the expected tariff impact through internal initiatives such as supply chain realignment the $4–$5 billion figure reflects gross exposure, without those mitigations factored in.
The updated guidance also accounts for a $500 million recall-related cost in Q2, affecting nearly 600,000 SUVs and trucks due to engine issues.
The Trump administration recently modified aspects of the tariff policy to reduce double-charging on U.S. auto parts and offer partial reimbursement. However, the broader tariff structure still poses steep new costs for manufacturers with globally integrated supply chains.
Barra emphasized that now, with “clarity” on trade rules, GM can reinvest more confidently in U.S. operations but warned that the overall auto market may shrink. Jacobson echoed that, predicting lower total sales volume for the industry, though he expects pricing to remain steady.
GM now expects adjusted earnings before interest and taxes (EBIT) to range from $10 billion to $12.5 billion, a significant drop from its previous guidance of $13.7 billion to $15.7 billion. Likewise, net income is forecast between $8.2 billion and $10.1 billion, down from $11.2 billion to $12.5 billion.
The company also trimmed its automotive free cash flow guidance to $7.5 billion to $10 billion, down from up to $13 billion.
Supply chain under pressure, but GM pushes forward
Barra pointed to long-term efforts to “re-shore” production, highlighting a 27% increase in U.S.-sourced parts since 2019. She suggested that having 11 large U.S. assembly plants gives GM flexibility to add capacity domestically, avoiding costlier greenfield investments.
Still, she declined to say whether the company would shift production away from Mexico or raise vehicle prices to offset costs.
CFO: 30% of tariff costs can be mitigated internally
The updated guidance also accounts for a $500 million recall-related cost in Q2, affecting nearly 600,000 SUVs and trucks due to engine issues.
Trump’s tariff policy shakes auto sector
Barra emphasized that now, with “clarity” on trade rules, GM can reinvest more confidently in U.S. operations but warned that the overall auto market may shrink. Jacobson echoed that, predicting lower total sales volume for the industry, though he expects pricing to remain steady.