Tariff’s Hit Markets, GM Lags as Auto’s Down

The imposition of tariffs has already had tangible effects on the stock market. GM's share price (NYSE: GM) has decreased by 7.26% in the pre-market, Ford's stock (NYSE: F) has fallen by 4.17% and Tesla (NASDAQ: TSLA) is down 2.7%.

General Motors Chair and CEO Mary Barra had engaged in discussions with President Donald Trump concerning the impact of tariffs on the automotive industry. Barra emphasised GM's preparedness to mitigate the effects of tariffs and expressed belief in Trump's desire for a robust manufacturing sector due to its economic benefits.

GM has projected its full-year 2025 earnings per share (EPS) to be between $11 and $12, surpassing consensus expectations of $10.75. This forecast was however contingent upon a stable policy environment without the imposition of new tariffs. Barra believes that Trump comprehends the potential economic ramifications of tariffs and aims to maintain well-balanced international relationships to support his administration's objectives.

The automotive industry is heavily intertwined with international trade, with 26% of U.S. imports from Mexico and 12% from Canada attributed to auto products. GM operates profitably by manufacturing pickup trucks in Mexico and depends on its Mexican facilities for producing electric vehicles (EVs) such as the Chevrolet Blazer and Cadillac Optiq. GM maintains significant assembly operations in both Mexico and Canada.

In contrast, Ford produces 12% of its vehicles in Canada and Mexico. Bank of America auto analyst John Murphy has highlighted that additional U.S. capacities are insufficient to offset the impacts of potential tariffs, which could lead to a decline in demand if vehicle prices rise.