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Leadership at General Motors and Ford Motor Co. is actively communicating with employees and investors regarding their strategies to navigate the challenges posed by the new tariffs imposed by the Trump administration. Effective Thursday, a 25% tariff will be implemented on all imported vehicles and most auto parts, prompting both companies to reassure their stakeholders about their readiness to adapt to the upcoming changes.
Internal communications obtained by the Detroit Free Press from both automakers indicate an understanding that while they remain strong entities, they will still feel the ramifications of the tariffs. The automakers have urged their employees to concentrate on their roles and exercise caution in corporate spending amid this shifting economic landscape.
An unsigned memo from GM, dated March 27, the day after the tariffs were announced, acknowledges the potential effects on its manufacturing operations and supply chains. Both GM and Ford source numerous parts from international suppliers, even for vehicles produced within the United States.
While the memo does not specify the anticipated impact on GM’s operations, it emphasizes the company’s commitment to a robust domestic auto industry and outlines plans for agility in response to the executive order. Likewise, Ford CEO Jim Farley has expressed concern in his own March 27 memo regarding the significant repercussions the tariffs may have on the automotive sector.
Farley stated that while Ford endorses the administration’s vision of a more robust U.S. manufacturing base, the fast-evolving situation could bring considerable impacts across the automotive landscape, affecting manufacturers, suppliers, dealers, and consumers. Although approximately 80% of Ford’s sales come from vehicles manufactured domestically, Farley highlighted that the company is still vulnerable to the effects of tariffs.
In his memo, Farley reassured employees of Ford’s commitment to engaging with the Trump administration and other policymakers in the U.S., Canada, Mexico, and beyond to influence trade policies beneficially. He underscored the need for vigilance, stating that the upcoming tariffs may lead to substantial cost increases for automakers and suppliers, possibly raising vehicle prices by $5,000 to $10,000.
Trump has touted the tariffs as a means to bolster U.S. manufacturing and generate tax revenue while creating jobs, suggesting he is indifferent to price hikes that may result from these tariffs. His off-the-cuff remarks included hopes that such price increases would steer customers toward American-made vehicles, even as the reality reflects that no vehicle is entirely American-made due to the global supply chain.
GM reports that around 46% of its vehicles sold in the U.S. are imported, while Ford has a lower figure at 21%, providing it with a slight edge in the current tariff context. For example, the Ford F-Series Super Duty pickup, while assembled domestically, still relies on numerous imported components, highlighting the complexity of the supply chain even within U.S. manufacturing.
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Both automakers are advising their employees to remain focused and disciplined in managing costs. GM’s memo emphasizes identifying vulnerabilities within their supply chains and production processes while maintaining a disciplined approach to business operations.
In a recent filing with the U.S. Securities and Exchange Commission, Ford Executive Chair Bill Ford reiterated the company’s capability to endure amid the uncertainties surrounding tariff policies and competitive pressures from new entrants in the automotive market, particularly from electric vehicle manufacturers from China.
Bill Ford has actively engaged with the Trump administration in discussions regarding the tariffs in a bid to mitigate their effects. However, the recent executive order has already sent ripples through the industry, prompting analysts to note the sustainability challenges posed by these tariffs.
The complexities of the global supply chain mean that the repercussions of these tariffs could resonate internationally, potentially affecting demand for vehicles produced by GM and Ford in foreign markets as other countries may retaliate with their own tariffs.
While there has yet to be a comprehensive communication from Stellantis regarding employee sentiments on the tariffs, a spokesperson has referred to a statement from the American Automotive Policy Council. The group, representing multiple automakers, pledged commitment to the administration’s goals for increasing domestic production and jobs, while working to ensure that tariff implementations do not lead to increased consumer prices or eroded competitiveness for the manufacturers.
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finance.yahoo.com