April 1, 2025 – Detroit, MI – As the United States navigates a shifting landscape of trade policies under the Trump administration, General Motors (NYSE: GM), one of America’s automotive giants, finds itself in a precarious position. Industry analysts and market observers widely anticipate that GM will bear the brunt of the recently announced 25% tariffs on auto imports, a move that threatens to disrupt the company’s operations, profitability, and stock performance. With nearly half of its U.S. sales reliant on vehicles assembled outside the country, GM’s exposure to these tariffs has sparked concerns about its ability to adapt in the short term, even as the company scrambles to mitigate the fallout.
A Tariff Storm Hits Detroit
On March 26, 2025, President Donald Trump signed an executive order imposing a 25% tariff on all vehicles and certain auto parts not manufactured in the United States, effective April 3 for vehicles and May 3 for parts. The policy, framed as a means to bolster domestic manufacturing and protect American jobs, targets imports from key trading partners like Canada, Mexico, and South Korea. While the administration has touted the tariffs as a boon for U.S. industry, the immediate reaction from Wall Street and the automotive sector suggests a more complicated reality—particularly for General Motors.
GM’s stock took a significant hit following the announcement, plummeting more than 7% on March 27, outpacing declines seen by competitors Ford Motor Company (NYSE: F) and Stellantis (NYSE: STLA), which fell by roughly 3% and 1%, respectively. Tesla (NASDAQ: TSLA), with its predominantly U.S.-based production, emerged relatively unscathed, with shares remaining stable. The stark divergence underscores GM’s unique vulnerability: approximately 30% of the vehicles it sold in the U.S. during the first three quarters of 2024 were assembled in Canada and Mexico, with an additional 15% imported from South Korea.
“GM has the most exposure to Mexico among the Detroit Three,” noted Deutsche Bank analysts in a report issued shortly after the tariff announcement. “Tesla and Ford appear to be the most shielded given the location of their vehicle assembly facilities, though Ford does face some risk from imported engines.” For GM, the reliance on cross-border supply chains—honed over decades under the North American Free Trade Agreement (NAFTA) and its successor, the United States-Mexico-Canada Agreement (USMCA)—has now become a liability.
The Numbers Tell the Story
The financial implications of the tariffs are staggering. Goldman Sachs estimates that a 25% tariff could add billions in additional costs for GM, potentially wiping out a significant portion of its global profits. Analyst Mark Delaney projected that each vehicle imported from Mexico or Canada contains between $5,000 and $10,000 worth of parts from those countries, meaning the tariffs could translate to a per-vehicle cost increase of $1,250 to $2,500. For GM, which sold 2.7 million vehicles in the U.S. in 2024, the total cost could range from $3 billion to $6 billion annually if the tariffs persist.
Morningstar analysts have taken an even grimmer view, slashing their fair value estimate for GM stock from $81 to $73 per share, citing the tariffs as “the worst-case scenario” for the company. “We estimate that GM did the final assembly of about 54% of its 2024 U.S.-sold vehicles in the U.S., while 25% came from Mexico, 5% from Canada, and 15% from South Korea,” the firm reported. This contrasts sharply with Ford, which assembled 80% of its U.S.-sold vehicles domestically, and Tesla, which relies almost entirely on U.S. production.
The tariffs’ impact extends beyond finished vehicles. GM’s supply chain, like that of most automakers, is deeply integrated across North America, with parts crossing borders multiple times before final assembly. Mexico and Canada account for more than 50% of all auto parts exported to the U.S., totaling nearly $100 billion annually. A 25% tariff on these components could further inflate production costs, even for vehicles assembled stateside, squeezing GM’s already tight margins.
GM’s Response: Mitigation and Uncertainty
GM executives have not sat idly by. CEO Mary Barra, speaking at a conference in February, expressed confidence in the company’s ability to mitigate up to 50% of the tariff impact through short-term measures like inventory adjustments and supply chain rebalancing—steps that wouldn’t require significant capital investment. “We have an extensive playbook ready,” Barra reiterated during a recent earnings call, emphasizing GM’s preparedness for a range of trade scenarios.
CFO Paul Jacobson echoed this optimism at a Barclays conference in February, noting that the company had begun moving inventory across borders ahead of the anticipated tariffs. However, he cautioned that permanent tariffs would force tougher decisions, such as relocating plants—a process that could cost billions and take years to implement. “If they become permanent, then there’s a whole bunch of different things that you have to think about in terms of where you allocate plants and do you move plants,” Jacobson said.
Despite these assurances, investor confidence has wavered. GM’s stock slid an additional 8.9% on January 28, even after the company reported fourth-quarter earnings that exceeded Wall Street expectations—$47.7 billion in revenue against a forecast of $43.9 billion, and adjusted earnings per share of $1.92 compared to $1.89 anticipated. Analysts attributed the drop to tariff-related fears overshadowing the otherwise strong performance, with Jeff Windau of Edward Jones noting, “There’s just a lot of uncertainty between tariffs and the rules and regulations around EVs and tax incentives that isn’t baked into GM’s guidance.”
A Broader Industry in Chaos
GM’s plight is emblematic of broader turmoil in the U.S. automotive sector. Ford CEO Jim Farley recently described the tariff environment as “chaos,” arguing that the policy uncertainty is disrupting long-term planning for an industry already grappling with the transition to electric vehicles (EVs) and rising costs. While Ford is better positioned than GM, with 78% of its U.S.-sold vehicles assembled domestically, it too faces challenges from imported parts and engines.
The United Auto Workers (UAW), however, has hailed the tariffs as a victory. “We applaud the Trump administration for stepping up to end the free trade disaster that has devastated working-class communities for decades,” UAW President Shawn Fain said in a statement. The union sees the policy as a catalyst for bringing production back to the U.S., though critics argue that such a shift would take years and billions in investment—resources automakers may not have amid immediate cost pressures.
For GM, the stakes are particularly high. The company’s highly profitable full-size pickup trucks, like the Chevrolet Silverado and GMC Sierra, are among the models assembled in Mexico, alongside lower-priced EVs like the Chevrolet Equinox. A 25% tariff could force GM to either absorb the costs, risking profitability, or pass them on to consumers, potentially dampening demand in an already competitive market.
The Road Ahead
As the April 3 implementation date looms, GM faces a critical juncture. Analysts suggest that the company may need to accelerate plans to shift production to the U.S., a move that could align with Trump’s stated goal of revitalizing American manufacturing but would come at a steep price. Bank of America’s John Murphy warned that GM is “relatively exposed” compared to its peers and may need to “rebalance” its operations—a polite way of saying that major restructuring could be on the horizon.
For now, the market remains jittery. GM’s stock is down 13% year-to-date, and while some traders see the dip as a buying opportunity, others fear that weakened demand and retaliatory tariffs from Canada and Mexico could compound the pain. The company’s 2025 guidance—net income of $11.2 billion to $12.5 billion—has been met with skepticism, with analysts questioning whether GM can deliver amid such uncertainty.
As the dust settles on Trump’s “Liberation Day” for tariffs, as he dubbed April 2, General Motors stands at the epicenter of a policy shift that could reshape the U.S. auto industry. Whether it can navigate this storm without lasting damage remains to be seen, but one thing is clear: for GM, the road ahead is fraught with challenges that no amount of contingency planning may fully resolve.
