General Motors (GM) shares have declined by more than 14% this year due to tariffs and economic uncertainty, affecting many of its more affordable models, such as the Chevrolet Trax and Buick Envista SUVs produced in Korea. These models rely on low-cost production in Korea, where the 25% tariffs are impacting GM, representing $2 billion of the manufacturer's exposure to imports.
GM also imported nearly 55,000 vehicles from China last year, facing a tariff of 145%. In contrast, vehicles produced in Canada or Mexico by GM and other Detroit manufacturers face lower tariffs due to the free trade agreement between these countries negotiated during Trump's first term.
According to research firm GlobalData, nearly half of the vehicles sold by GM in the U.S. last year were manufactured abroad. Ford announced it seeks to manufacture more auto parts in the U.S. but does not plan to reduce production in its Mexican plants. Despite the auto affordability crisis in the U.S., GM must maintain an agile and disciplined strategy to face the challenges.
Korean manufacturer Hyundai Motor, which imported more than 1.1 million vehicles to the U.S. last year, announced expansion plans in the country. Toyota, for its part, has increased its manufacturing in the U.S. to reduce reliance on imports. GM will rely on cost cuts to offset the tariff impact rather than raising prices on its cars.
GM faces significant challenges due to the tariffs imposed by Trump, with estimates indicating a drastic reduction in pre-tax earnings for the year 2025. Despite some partial relief on tariffs, GM along with other automakers in the U.S. is struggling to remain competitive under the current trade pressure.
In conclusion, GM shares have fallen due to economic uncertainty and imposed tariffs, affecting its production abroad and jeopardizing its profitability. The company must confront these challenges and maintain flexible strategies to adapt to the changing international business landscape.
