GM Withdraws 2025 Earnings Forecast Amid New U.S. Auto Tariffs

General Motors (GM) has withdrawn its 2025 annual earnings forecast, citing significant uncertainty stemming from new U.S. auto tariffs imposed by President Donald Trump. The 25% tariffs on imported automobiles and auto parts, set to begin on May 3, have prompted GM to reassess its financial outlook and strategic plans.

The introduction of substantial tariffs on imported vehicles and parts has created a volatile environment for automakers. GM's decision to retract its earnings guidance underscores the profound impact these trade policies may have on the automotive industry, potentially leading to higher vehicle prices, disrupted supply chains, and strategic shifts among major manufacturers.

On March 26, 2025, President Trump signed a proclamation under Section 232 of the Trade Expansion Act of 1962, imposing a 25% tariff on imports of automobiles and certain automobile parts. This action aims to protect the U.S. automobile industry, deemed vital to national security, from excessive imports that threaten the domestic industrial base and supply chains. The tariffs apply to imported passenger vehicles and light trucks, as well as key automobile parts such as engines, transmissions, powertrain parts, and electrical components. Importers of automobiles under the United States-Mexico-Canada Agreement (USMCA) can certify their U.S. content, with the 25% tariff applying only to the value of their non-U.S. content.

Prior to the tariff announcement, GM had projected adjusted operating earnings between $13.7 billion and $15.7 billion for 2025. However, the new trade measures have introduced significant uncertainty, leading the company to withdraw this forecast.

In the first quarter of 2025, GM reported a 9.8% decline in adjusted profits to $3.5 billion, despite a 2.3% increase in revenue to $44 billion. The company also experienced a 6.6% decline in net income to $2.8 billion. Despite these challenges, U.S. deliveries surged by over 20% year-over-year in April, as consumers rushed to purchase vehicles ahead of anticipated price hikes due to the tariffs.

Analysts anticipate that vehicle prices could rise by $4,000 to $10,000 as a result of the tariffs, potentially reducing consumer demand and impacting sales.

In response to the uncertainty, GM is pausing its $2 billion share buyback plan and plans to provide updated financial guidance after gaining further clarity on trade policies. The company also plans to increase production at its Indiana facility by 50,000 units annually to mitigate the impact of tariffs.

"The future impact of tariffs could be significant," GM Chief Financial Officer Paul Jacobson said on a call with the media. "We're telling folks not to rely on the prior guidance, and we'll update when we have more information around tariffs."

While GM CEO Mary Barra expressed support for the administration's efforts to bolster U.S. investments, analysts warn that the new levies could reduce GM’s earnings before interest and taxes by $4.5 billion next year.

The auto industry has expressed significant concern over the new tariffs. Analysts project that vehicle prices could increase by $4,000 to $10,000, potentially reducing consumer demand and impacting sales. GM, which imports many vehicles from Canada, Mexico, and South Korea, is particularly vulnerable. In response, the company plans to increase production at its Indiana facility by 50,000 units annually. While GM CEO Mary Barra expressed support for the administration's efforts to bolster U.S. investments, analysts warn that the new levies could reduce GM’s earnings before interest and taxes by $4.5 billion next year.

The tariffs are expected to have broad social and economic implications. Consumers may face higher vehicle prices, leading to decreased affordability and potential declines in sales. The auto industry, a significant employer in the U.S., could experience job losses and production shifts. The tariffs may also strain international trade relations, particularly with countries like Canada, Mexico, Japan, South Korea, and Germany, which are major suppliers of vehicles and parts to the U.S. market.

GM's withdrawal of its 2025 earnings forecast highlights the profound impact of recent trade policies on the automotive industry. As the company navigates this uncertain landscape, stakeholders will closely monitor how GM and other automakers adapt to the evolving trade environment and its implications for the broader economy.