GM Lowers 2025 Financial Guidance Amid Auto Tariff Impact

General Motors (GM) announced on Thursday that it has revised its 2025 financial guidance, now factoring in a potential $4 billion to $5 billion impact from President Donald Trump’s auto tariffs. The Detroit automaker adjusted its earnings before interest and taxes (EBIT) forecast to a range of $10 billion to $12.5 billion, a significant reduction from its earlier estimate of $13.7 billion to $15.7 billion.

The update to GM’s guidance also includes a downward revision of its net income forecast for 2025, now projected to be between $8.2 billion and $10.1 billion, compared to a prior estimate of $11.2 billion to $12.5 billion. Additionally, GM lowered its expected adjusted automotive free cash flow to a range of $7.5 billion to $10 billion, down from the previous forecast of $11 billion to $13 billion.

Impact of Tariffs and Cost Mitigation Efforts

The tariff impact comes after Trump’s 25% tariffs on imported vehicles were implemented in early April, with additional levies expected on auto parts. However, GM noted that the company’s new guidance incorporates the positive effects of recent changes to the tariffs, including reimbursements for U.S.-sourced parts and a reduction in the stacking of tariffs for the industry.

GM CFO Paul Jacobson told investors that the company plans to mitigate at least 30% of the expected tariff-related cost increases through its “self-help initiatives,” but acknowledged that the full $4 billion to $5 billion impact has not yet been fully offset.

Resilient Business and Supply Chain Adjustments

Despite the tariff-related challenges, GM CEO Mary Barra expressed confidence in the company’s ability to adapt to the evolving trade policy landscape. In a shareholder letter, she highlighted GM’s ongoing efforts to strengthen its supply chain and further expand its electric vehicle (EV) production capabilities.

“We’re going to leverage our footprint in the U.S.,” Barra stated, referring to the company’s 11 large assembly plants in the U.S. that employ tens of thousands of workers. She also noted a 27% increase in the use of U.S.-sourced parts as part of GM’s efforts to increase domestic content and enhance supply chain resilience.

While Barra did not comment on whether GM plans to shift production from its Mexican plants to the U.S., she emphasized that the company is committed to optimizing its current U.S. facilities, which will enable GM to add capacity and adapt quickly without the need for new greenfield plants.

Future Outlook and Market Conditions

GM’s new guidance also reflects expectations of a slight improvement in pricing compared to last year, despite lower overall industry sales. The company’s forecast suggests pricing will remain steady throughout the rest of the year, which could help offset the ongoing challenges posed by higher tariffs.

As the company continues to navigate the complexities of the U.S. auto market and evolving trade policies, GM remains focused on strengthening its domestic operations and adapting its production strategy to meet the needs of the market.