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GM anticipates tariffs slicing full-year earnings by $4 billion to $5 billion
peaty automaker General Motors (GM) issued a revised earnings outlook on Thursday, revealing a potential hit of $4 billion to $5 billion from the Trump administration's auto tariffs. However, the carmaker insists it's got tricks up its sleeve to soften the financial blow.
The new estimated 2025 adjusted earnings per share for GM stands at $8.25 to $10.00, a significant dip from the previous range of $11.00 to $12.00. The adjusted earnings before interest and taxes (EBIT) outlook also underwent a downgrade, dropping from $13.7 billion to $15.7 billion to a range of $10.0 billion to $12.5 billion.
GM anticipates that executive actions taken this week will help counter roughly 30% of the duty-related damage. The company's adjusted auto free cash flow guidance aims to keep U.S. innovation and manufacturing on track.
In a letter to shareholders, CEO Mary Barra highlighted discussions with the president's team since pre-inauguration days. GM looks forward to maintaining an open dialogue with the administration to keep shaping trade and other policies. Additionally, GM has been maintaining dialogues with key trade partners that could influence the final outcome.
On Tuesday, the Chevrolet and Cadillac-producing titan reported better-than-projected first-quarter earnings. However, the company delayed its full-year guidance update and earnings call, owing to uncertainty surrounding auto tariffs.
General Motors shares have shown mild fluctuations during early trading, with the stock price down roughly 14% this year.
In its attempt to overcome the tariff challenges, the automaker has adopted two strategic responses:
- Adjustments to U.S. production, optimizing its operations to minimize tariff exposure, although specifics, such as restructuring factories or rearranging supply chains, remain confidential.
- Elimination of tariff stacking, possibly achieved through smoother import processes or renegotiating with suppliers to avoid multiple fees.
These measures are intended to counterbalance at least one-third of the predicted $4 billion–$5 billion loss. Moreover, GM continues to advocate for itself in discussions with the Trump administration and trade partners to influence policy changes.
[1] "Enrichment Data": Based on available reports, General Motors has executed two primary strategies for mitigating auto tariffs' financial impact: a) Optimizing U.S. production methods to lessen tariff exposure. b) Eliminating tariff stacking, most likely by streamlining import processes and renegotiating with suppliers to avoid compounded duties.
- General Motors (GM), in an attempt to overcome the tariff challenges, has adopted two strategic responses: a) Adjustments to U.S. production, aiming to minimize tariff exposure by optimizing operations. Specifics, like restructuring factories or rearranging supply chains, remain confidential.
- The second strategic response is the elimination of tariff stacking, possibly achieved through smoother import processes or renegotiating with suppliers to avoid multiple fees.
- These measures are intended to counterbalance at least one-third of the predicted $4 billion–$5 billion loss from the Trump administration's auto tariffs.
- In the finance sector, GM continues to advocate for itself in discussions with the Trump administration and trade partners to influence policy changes.
- The automotive industry, represented by General Motors, has warned of potential earnings losses due to auto tariffs and is taking active steps to lessen their impact.
- In the business world, transportation companies and automakers like GM are closely monitoring trade tariffs and their potential effects on trading tokens, such as tokens for trading, in the upcoming years, particularly in 2025.
