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General Motors on Thursday slashed its full-year forecast as its CEO Mary Barra warned of “a current tariff exposure of $4 billion [to] $5 billion.”
The company, which owns brands including Chevrolet, Buick and Cadillac, now expects a profit between $8.2 billion and $10.1 billion, down from previous projections of between $11.2 billion and $12.5 billion, as it faces a steep 25% tariff on foreign vehicle imports.
It expects adjusted earnings of $8.25 to $10 a share, down from its previous forecast of $11 to $12 a share.
GM also said it is still planning between $10 billion to $11 billion in capital spending through the year.
Despite the projected multi-billion dollar hit from tariffs, GM’s chief executive Mary Barra lavished praise on the Trump administration in a letter to shareholders.
“We have had continual discussions with the President and his team since before the inauguration,” Barra wrote.
“They have invested the time to understand what it takes to be successful in this capital-intensive and highly competitive global industry, how we can work together to grow American manufacturing, and the importance of companies like GM,” she continued.
GM’s lowered forecast comes after Trump earlier this week announced efforts to ease the impact of tariffs on US automakers, preventing levies on other goods – like steel and aluminum – from stacking on top of his taxes on foreign vehicles.
The changes will be applied retroactively, so automakers could potentially receive refunds for taxes already paid on imports.
Trump also modified his planned taxes on auto parts, which were initially set to take effect on Saturday at 25%.
Now, automakers can be reimbursed on those tariffs up to an amount equal to 3.75% of the value of a US-made car for one year, according to The Wall Street Journal.
After a year, the reimbursement would fall to 2.5% of the car’s value, and then be phased out the following year.
Earlier this week, GM said it was delaying its profit forecast until its executives could glean more insight on the tariffs.
The company on Tuesday said net income fell 6.6% to $2.8 billion in the first quarter due in part to higher warranty and labor costs.
GM dealers also sold a lower sales mix of lucrative trucks and SUVs after a factory fire cut into shipments of these models, the company said.
Revenue jumped 2.3% in the same period thanks to a double-digit increase in sales as consumers rushed to snap up cars ahead of tariff-induced price hikes.
“The industry undoubtedly benefited from some pull-ahead demand from customers purchasing vehicles ahead of potential tariffs, particularly in March,” Chief Financial Officer Paul Jacobson said.
The bump in demand appears poised to extend through April, with GM’s deliveries on pace to grow 20% compared to the same month last year, Jacobson added.
US car sales grew 13% in March, but analysts have warned it’s likely a temporary burst, as automakers are expected to raise prices on vehicles in the months ahead to counter the additional tariff costs.
