Tariff Pressures Threaten Margins
The potential impact of former President Donald Trump’s 25% tariff on imported vehicles, effective since April 3, and additional steel, aluminum, and parts tariffs have heightened pressure on U.S. automakers. While some modifications may soften the blow—such as tariff reimbursements on auto parts for up to 3.75% of a car’s value—uncertainty remains. GM estimates it may offset 30% to 50% of North American tariffs but has already taken measures including boosting truck production in Indiana and pausing electric delivery van production in Canada.
Stock Buybacks Paused, Costs Climb
Although GM’s $2 billion accelerated buyback is on track to wrap up in Q2, all future repurchase activity is on hold. The automaker is balancing shareholder returns with rising costs, including a $300 million forex hit tied to the Mexican peso and $400 million in higher expenses related to labor, warranty claims, and depreciation. Compared to Q1 2024, net income fell slightly to $2.78 billion from $2.98 billion, and EBIT dropped to $3.49 billion from $3.87 billion, reflecting margin pressures.
Market Forecast: Cautious Bearish Outlook
Despite beating expectations, GM’s suspension of guidance and buybacks reflects growing caution. Tariff headwinds, uncertain regulatory changes, and higher input costs create a bearish near-term outlook for the stock. Until clearer policy direction emerges, traders should expect volatility and potential further downside risk.
More Information in our Economic Calendar.
