GM shares tank as U.S. auto industry digests new Trump tariffs
General Motors shares fell more than 7% Thursday as investors weighed the auto giant’s outsize vulnerability to the tariffs President Donald Trump announced Wednesday.
Among major U.S. automakers, GM has the most extensive operations in Mexico and Canada, which would take a direct hit from the president’s latest import taxes on vehicles and auto parts made abroad. The Chevy Silverado is produced by both of America’s immediate neighbors, while the Chevy Equinox and GMC Terrain are manufactured in Mexico. The Chevy Trax compact SUV, meanwhile, comes from South Korea.
“Tesla and Ford appear to be the most shielded [from tariff impacts] given location of vehicle assembly facilities although Ford does face incremental exposure on imported engines,” Deutsche Bank analysts wrote in a note Thursday. “GM has the most exposure to Mexico.”
Trump administration officials suggested there would be a temporary carveout for vehicles and parts that complied with the U.S.-Mexico-Canada free-trade agreement, but said how that would end up working was still being determined. At least one analyst suggested any auto tariffs that impacted Mexico and Canada would violate the agreement, which Trump negotiated during his first term.
The new levies come just as the car industry notches the highest first-quarter new-vehicle sales in the U.S. since 2021, Edmunds analysts said Thursday, with strong demand in March contributing to a 1% jump from the same period a year ago. But analysts now say that trend could be in peril.
“With nearly half of all vehicles sold being assembled outside of the U.S., we anticipate major repercussions from tariffs at any level,” said Ivan Drury, director of insights at Edmunds.
Goldman Sachs estimated the 25% duties could drive up sticker prices by anywhere from $5,000 to $15,000 per imported vehicle and by $3,000 to $8,000 for domestically made ones.
Automakers appear to be treading cautiously with their public remarks on the policy change.
“U.S. automakers are committed to President Trump’s vision of increasing automotive production and jobs in the U.S. and will continue to work with the Administration on durable policies that help Americans,” Matt Blunt, president of the American Automotive Policy Council, said in a statement following the announcement. “It is critical that tariffs are implemented in a way that avoids raising prices for consumers.”
But Ford CEO Jim Farley was far less sanguine last month, saying at an investment conference that 25% tariffs would be “devastating” and would “blow a hole in the U.S. industry that we’ve never seen.”
Speaking at the same conference, GM executives signaled they were prepared to weather as much as 50% of the impact from any new tariffs.
“When we know exactly what’s going to happen, and/or even have an indication of what’s going to happen, we know the steps we could take,” CEO Mary Barra said at the time. The company indicated it could take further steps to blunt the effects from long-lasting trade policies, including by shifting production.
But on Thursday the president emphasized that his new auto tariffs would be “permanent.” He has said they’ll bring more auto production back to the U.S. and generate vast revenues for government coffers, ballparking those proceeds at up to $100 billion without providing details behind that estimate.
While automakers could each feel the impacts differently, the whipsawing White House trade policies are destabilizing for the entire industry, experts say.
“What we’ve seen so far in this is an announcement and then a change, and then an announcement and then a change,” Stephanie Brinley, automotive analyst at S&P Global Mobility, said Wednesday evening. “I don’t know that anybody’s breathing a sigh of relief.”
For automakers, she said, “the situation is still incredibly complicated and the decisions are complex, and the tariffs that were announced are one portion of a lot of things that go into global sourcing decisions.” One silver lining, she added, is that “if this settles it down, and this is what the tariff is, instead of back-and-forth at least you have an answer.”
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