General Motors Slashes Profit Projections due to Auto Tariffs
GM Adjusts 2025 Projections Due to Estimated $5 Billion Tariff Influence
Brace yourself, auto enthusiasts! General Motors (GM) isn't exactly cruising along as expected in 2025. The car giant is readjusting its financial projections, anticipating a whopping $4 billion to $5 billion blow from auto tariffs[2][3].
Earlier this week, GM faced the harsh reality of these tariffs and, consequently, revised their full-year financial outlook[1]. Initially, their forecast didn't consider the potential impact of these tariffs.
The new forecast paints a revised picture of full-year adjusted earnings before interest and taxes (EBIT) in a range of $10 billion to $12.5 billion. This figure includes the current tariff exposure of $4 billion to $5 billion[1].
Historically, GM predicted 2025 EBIT to be $13.7 billion to $15.7 billion[1].
The altered forecast follows President Donald Trump's signed executive orders on Tuesday, which eased some of the original 25% tariffs on automobiles and auto parts. While this offered relief to domestic manufacturers, the overall effect remains uncertain[1].
Predictions suggest that these tariffs could inflate prices, decrease sales, and diminish U.S. competitiveness in the global auto market[1]. Trump views these changes as a stepping stone towards increasing domestic production[1].
However, the broader impact of Trump's tariffs on the U.S. economy and auto sales remains hazy. Most economists warn that these tariffs, which may ultimately affect most imports, could lead to increased prices and slowed economic growth[1]. This potential slowdown could potentially hurt auto sales, despite the administration's intended relief from its previous policies.
In a letter to shareholders, General Motors CEO Mary Barra expressed optimism about maintaining a strong dialogue with the Trump administration on trade and evolving policies[1]. She acknowledged the ongoing discussions with key trade partners, emphasizing that GM will stay nimble and provide updates as more information becomes available[1].
GM's shares rose more than 2% before the opening bell[1].
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[1] General Motors lowers profit expectations for 2025 as it braces for potential auto tariff impact | CNBC. (2021, June 25). CNBC.
[2] General Motors lowers 2025 profit estimates on auto tariff threat, hikes dividend, share buyback | Reuters. (2021, June 24). Reuters.
[3] Ford and General Motors lower profit forecasts as Trump eases tariffs on autos | Fox Business. (2021, June 24). Fox Business.
- The adjusted financial projections of General Motors in 2025 indicate a potential loss of $4 billion to $5 billion due to auto tariffs.
- In a letter to shareholders, GM CEO Mary Barra expressed optimism about maintaining a strong dialogue with the Trump administration on trade and evolving policies.
- Some experts warn that these auto tariffs could inflate prices, decrease sales, and diminish U.S. competitiveness in the global auto market.
- Trump views these changes as a stepping stone towards increasing domestic production, but the broader impact on the U.S. economy and auto sales remains uncertain.
- In the heart of Seattle, Pike Place Market is planning to ban most vehicle traffic in a test run, showing a shift towards reducing transportation-related issues.
- Economists have raised concerns that these tariffs, which may ultimately affect most imports, could lead to increased prices and slowed economic growth, potentially hurting auto sales despite the administration's intended relief from its previous policies.
