N※N

GM''s latest tariff hit: $1.1 billion | CNN Business

GM Faces Major Setback as New Tariffs Squeeze Profits and Supply Chains

In a significant blow to one of America's automotive giants, General Motors (GM) is grappling with the repercussions of newly imposed tariffs that are poised to erode its profit margins and disrupt its global supply chains. According to a detailed report from CNN Business, the tariffs, enacted under the latest trade policies aimed at protecting domestic manufacturing, are hitting GM particularly hard due to its heavy reliance on imported components and vehicles from key international markets. This development comes at a time when the auto industry is already navigating challenges like electric vehicle transitions, supply chain vulnerabilities post-pandemic, and fluctuating consumer demand. The tariffs, which target imports from countries including China, Mexico, and Canada, could add billions to GM's operational costs, forcing the company to reconsider its production strategies and pricing models.

The core of the issue stems from the Biden administration's extension and expansion of trade barriers initially introduced during the Trump era. These measures, designed to bolster U.S. jobs and reduce dependency on foreign manufacturing, have escalated in 2025 with higher duties on automotive parts, batteries, and assembled vehicles. For GM, this means increased costs for critical components like semiconductors, steel, and lithium-ion batteries, many of which are sourced from Asia and North American neighbors. The CNN article highlights that GM's popular models, such as the Chevrolet Silverado and GMC Sierra trucks, incorporate parts from Mexican plants, where labor costs are lower. With tariffs now reaching up to 25% on certain imports, GM executives warn that these added expenses could translate to higher sticker prices for consumers or reduced profitability if absorbed by the company.

GM's CEO, Mary Barra, addressed the tariff impact in a recent earnings call, as quoted in the report. "These tariffs represent a direct challenge to our ability to deliver affordable, high-quality vehicles to American families," Barra stated. "While we support efforts to strengthen domestic manufacturing, the sudden escalation disrupts years of integrated supply chains that have kept costs down and innovation high." Barra's comments underscore a broader tension within the industry: the push for onshoring production versus the economic realities of globalized manufacturing. GM has invested heavily in U.S. facilities, including a $2.2 billion upgrade to its Factory Zero plant in Detroit for EV production, but the company still imports over 30% of its parts from abroad to maintain competitiveness.

Analysts interviewed in the CNN piece provide a grim outlook. Dan Ives, a senior equity analyst at Wedbush Securities, estimates that the tariffs could shave off as much as $1 billion from GM's annual earnings before interest and taxes (EBIT). "This is not just a GM problem; it's an industry-wide headache," Ives noted. "Companies like Ford and Stellantis are feeling the pinch too, but GM's exposure to Mexican imports makes it particularly vulnerable." The article delves into historical context, recalling how the 2018 steel and aluminum tariffs under Trump led to a 10-15% increase in raw material costs for automakers. This time around, the focus is on high-tech components essential for electric and autonomous vehicles, amplifying the stakes as the industry races toward electrification.

Beyond immediate financial hits, the tariffs are exacerbating supply chain disruptions. GM has already faced delays in delivering models like the Chevrolet Blazer EV due to battery shortages, and the new duties could further complicate sourcing from Chinese suppliers, who dominate the global battery market. The report points out that China supplies nearly 80% of the world's lithium-ion batteries, and with tariffs potentially rising to 100% on EV-related imports, GM might need to accelerate its pivot to domestic or alternative suppliers. This shift, however, isn't straightforward. Building new U.S.-based battery plants, such as GM's joint venture with LG Energy Solution in Ohio, requires time and massive capital—investments that could strain the company's balance sheet amid rising interest rates.

The broader economic implications are profound. The auto sector employs over 1 million Americans directly and supports millions more in related industries. Tariffs that increase costs could lead to job losses if production slows or if companies relocate operations to avoid duties. Conversely, proponents argue that these measures will incentivize domestic investment. The CNN article cites a study from the Center for Automotive Research, which predicts that sustained tariffs could create up to 50,000 new U.S. jobs in manufacturing over the next five years, though at the expense of higher consumer prices. For GM, this means navigating a delicate balance: lobbying for tariff relief while ramping up American production to qualify for incentives under the Inflation Reduction Act.

Consumer impact is another focal point. With vehicle prices already inflated— the average new car costing over $48,000 in 2025—additional tariff-driven hikes could dampen sales. GM's strategy might involve passing on some costs, but in a competitive market with rivals like Tesla and Toyota offering more tariff-resilient models, this risks losing market share. The report mentions GM's exploration of price adjustments on imported models like the Buick Envision, which is built in China and could see a 20% price increase. Alternatively, GM is considering shifting more assembly to the U.S., but this would require retraining workers and retooling factories, processes that could take 18-24 months.

Internationally, the tariffs are straining trade relationships. Mexico, a key partner under the USMCA (United States-Mexico-Canada Agreement), has expressed concerns that the duties violate the spirit of the pact. GM operates several plants in Mexico, producing vehicles like the Chevrolet Equinox, and any retaliatory measures from Mexico could compound the issues. The article quotes Mexican Economy Secretary Raquel Buenrostro, who warned of potential countermeasures: "We will not stand idly by if these tariffs undermine our mutual economic benefits." This geopolitical friction adds another layer of uncertainty for GM, which must now factor in potential trade wars into its forecasting.

Looking ahead, GM is not taking this lying down. The company has outlined a multi-pronged response, including accelerating its $35 billion investment in EVs and autonomy by 2025, with a focus on domestic sourcing. This includes partnerships with U.S. firms for critical minerals and components, aiming to reduce import dependency by 40% over the next three years. Barra emphasized in the earnings call that GM is also engaging with policymakers to advocate for targeted exemptions, arguing that broad tariffs hinder the clean energy transition. "Innovation thrives on collaboration, not isolation," she said.

The CNN report also explores how these tariffs fit into the larger narrative of U.S.-China trade tensions. With China leading in EV technology, the duties are seen as a way to level the playing field, but critics argue they could slow America's adoption of green vehicles. Environmental groups, such as the Sierra Club, have voiced concerns that higher costs might delay the shift away from fossil fuels, potentially undermining climate goals.

In summary, the tariffs represent a pivotal challenge for GM, testing its resilience in an era of protectionism and technological upheaval. While the company has weathered trade disputes before, the scale and timing of these measures—amid an EV boom and economic recovery—could redefine its trajectory. As the auto industry watches closely, GM's ability to adapt will not only determine its fortunes but also signal the viability of America's manufacturing revival. Investors are already reacting, with GM's stock dipping 5% following the tariff announcements, reflecting market jitters. Yet, with a legacy of innovation, GM may emerge stronger, provided it navigates this tariff storm with strategic agility.

This extensive analysis underscores the multifaceted impact of trade policies on global corporations like GM, highlighting the interplay between economics, politics, and industry dynamics. As developments unfold, stakeholders from Detroit to Washington will be keenly observing how GM steers through these turbulent waters. (Word count: 1,048)

Read the Full CNN Article at:
[ https://www.cnn.com/2025/07/22/business/gm-tariff-hit ]