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DETROIT — General Motors (GM) has expressed confidence that it can alleviate nearly 50% of the potential impact from tariffs that President Donald Trump has threatened to impose on imports from Mexico and Canada, according to CEO Mary Barra.
During a Wolfe Research investment conference, Barra outlined the company’s readiness to handle the tariffs on auto parts and vehicles should they be enforced. She mentioned that GM has strategies in place that could mitigate short-term cost increases by between 30% and 50%, all without the need for new capital expenditures. “We are prepared,” Barra stated, emphasizing the company’s proactive approach to the evolving situation.
Joining Barra was GM CFO Paul Jacobson, who noted that if these tariffs persist, the company might resort to additional strategies, such as relocating production or sourcing different parts or vehicles. This detailed commentary comes after investors raised concerns regarding the implications of these tariffs, concerns that went unaddressed during GM’s recent quarterly earnings call, which resulted in an 8% drop in the company’s stock price.
GM operates facilities in Canada and has significant production activities in Mexico, especially for its lower-cost electric vehicles and profitable pickup trucks. Barra’s insights followed remarks from Ford Motor Company’s CEO Jim Farley, who highlighted the chaos and rising costs the automotive sector is currently experiencing due to Trump’s tariff proposals.
Farley, during the Wolfe conference, criticized the 25% tariffs on steel and aluminum, as well as the threatened tariffs on imports from Mexico and Canada, noting their detrimental impact on the industry. He stated, “If his administration can achieve that, it would be one of the most significant accomplishments. However, what we’re seeing is a lot of cost and chaos.”
Ford’s supply chain relies on both domestic and international sources for materials, and although a majority of their steel and aluminum are sourced locally, fluctuations in international pricing could still influence operational costs. In response to the tariffs, GM is currently analyzing their effects on its business while highlighting its significant domestic sourcing of these materials, along with fixed pricing arrangements in the short term.
Both GM and Ford have previously supported Trump financially, contributing $1 million each to his inauguration, and have maintained communication with his administration regarding the automotive landscape. CFO Sherry House of Ford emphasized that even seemingly minor tariff actions from international suppliers could collectively have damaging effects on their operations, describing the current situation as a pervasive “cost of chaos.”
Farley raised alarms about the potential implications of a long-term 25% tariff on goods from Mexico and Canada, characterizing it as “devastating” for the U.S. auto industry. Following his earlier warnings, he is scheduled to visit Washington, D.C., to discuss the impact of tariff policies on the auto sector with government officials. He urged that if tariffs are indeed going to affect the automotive market, a thorough evaluation of all countries involved should be considered, especially citing the lack of duties facing major competitors like Toyota and Hyundai.
Ford, which prides itself on its domestic production capabilities and exports, confirms its position as the leading auto manufacturer in the U.S. Nevertheless, the ongoing uncertainty regarding tariffs presents a significant challenge for both GM and Ford as they navigate the complex landscape of international trade and domestic manufacturing.
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