General Motors has reduced its profit forecasts for 2025 due to exposure to tariffs amounting to up to 5 billion dollars on automobiles from President Donald Trump. This becomes one of the largest financial impacts revealed by a company so far due to the ongoing trade war. The company expects earnings before interest and taxes to be between 10 billion and 12.5 billion dollars, down from the initial projection of up to 15.7 billion dollars.
Trump has issued a "relief" measure for automobile manufacturers by reducing certain tariffs on imported vehicles and parts, which has led General Motors to suspend its forecasts and postpone a conference call with analysts awaiting more details on the tariffs. The company aims to offset at least 30 percent of its tariff exposure through production offsets in the United States.
The company has stated that its exposure to the tariffs has had a minimal impact so far on the first quarter results. Despite exceeding Wall Street estimates with a profit of 2.78 dollars per share, General Motors has experienced a decline in profits due to lower pickup truck production and currency costs. The company has cut capital spending in the first quarter by 900 million dollars, reaching 1.8 billion dollars.
Trump's measure, which exempted vehicles from aluminum and steel tariffs and modified the 25 percent tariff on imported auto parts, aims to increase the production of pickup trucks at an Indiana plant to meet demand, thereby avoiding tariffs. General Motors has plants in Canada and Mexico where it manufactures its pickup trucks, which are profitable and high-selling.
The company aims to maintain constant dialogue with the administration on trade and other policies as circumstances evolve. Analysts have considered the profit forecasts to be better than expected, and General Motors continues to take measures to preserve its liquidity amid a challenging business environment.
