Jamie Spencer
General Motors (GM) CEO Mary Barra said Tuesday that the company has contingency plans in place to mitigate between 30% and 50% of the potential tariffs President Donald Trump is threatening to impose on imports from Canada and Mexico.
GM’s Strategy to Counter Tariffs
Speaking at the Wolfe Research investment conference, Barra assured investors that GM is “prepared” to minimize the impact of new 25% tariffs on auto parts and vehicles from Mexico and Canada. She emphasized that the company could absorb a significant portion of these additional costs in the short term without requiring new capital investments.
GM CFO Paul Jacobson added that if the tariffs remain in place for an extended period, the automaker could take further steps, such as shifting production of vehicles and parts.
Investor Concerns and Market Reaction
These comments come after investor concerns about tariffs weren’t addressed during GM’s recent earnings call, leading to an 8% drop in stock value. GM has extensive operations in Mexico, producing lower-cost EVs and its highly profitable full-size pickup trucks.
Ford CEO: Tariffs Causing “Chaos”
Ford CEO Jim Farley voiced stronger concerns, calling the tariffs “a lot of cost, and a lot of chaos” for the U.S. auto industry. He warned that a long-term 25% tariff on Mexico and Canada, potentially effective March 1, would be “devastating” and could “blow a hole in the U.S. industry that we’ve never seen.”
Ford has taken a proactive stance, with Farley traveling to Washington, D.C., to meet with government officials, urging a comprehensive approach to tariffs that also addresses Japanese and South Korean imports.
Impact on the U.S. Auto Industry
Both GM and Ford source most of their steel and aluminum domestically, but new metal tariffs could still impact suppliers and overall costs. Ford CFO Sherry House highlighted that “small actions” on different parts of the supply chain are combining to create a major challenge for automakers.
Despite uncertainties, GM is confident in its ability to manage costs, while Ford is raising alarms about long-term consequences. With auto executives engaging with lawmakers, the industry awaits further clarity on Trump’s tariff strategy.
