GM has plans to mitigate up to 50% of potential North American tariffs

President Trump’s Tariffs: General Motors CEO Mary Barra Says Company Can Mitigate Up to 50% of Potential Costs

General Motors CEO Mary Barra said Tuesday that the company believes it can mitigate up to 50% of potential tariffs President Donald Trump is threatening to impose on imports from Canada and Mexico.

Contingency Plans Ready

The chief executive said the Detroit automaker has contingency plans ready for if tariffs are levied on auto parts and vehicles coming into the U.S. from the two neighboring countries. That includes potentially avoiding short-term impacts of between 30% and 50% of the additional costs "without deploying any capital."

"We are prepared," Barra said Tuesday during a Wolfe Research investment conference. "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."

Crosstown Rival Ford Motor’s Concerns

Crosstown rival Ford Motor CEO Jim Farley, who also appeared at the Wolfe conference, expressed concerns about the impact of tariffs on the U.S. automotive industry. He described the tariffs as causing "chaos" and said a long-term 25% tariff that could go into effect as soon as March 1 would be "devastating" and "blow a hole in the U.S. industry that we’ve never seen."

Tariffs Already Adding Cost and Chaos

Farley said the 25% tariffs on steel and aluminum, as well as threatened levies of the same amount on Mexico and Canada, are currently adding "a lot of cost, and a lot of chaos" to the industry. He noted that a majority of Ford’s steel and aluminum are domestically sourced, but there are suppliers to the automaker that source such materials from outside of the country, which could have an impact on costs.

Impact on Business

Barra noted GM is "evaluating" the impact of the steel and aluminum tariffs on its business, but said the company sources a "significant" amount of both from the U.S. In the short term, she said GM also has fixed pricing on such purchases.

Conclusion

The comments from General Motors and Ford Motor CEOs highlight the concerns and uncertainty surrounding President Trump’s tariffs on imports from Canada and Mexico. While General Motors believes it can mitigate up to 50% of potential costs, Ford Motor is expressing concerns about the impact on the U.S. automotive industry.

Frequently Asked Questions

Q: What is the potential impact of tariffs on General Motors?
A: General Motors believes it can mitigate up to 50% of potential tariffs by avoiding short-term impacts of between 30% and 50% of the additional costs "without deploying any capital."

Q: What is the concern of Ford Motor regarding tariffs?
A: Ford Motor CEO Jim Farley expressed concerns about the impact of tariffs on the U.S. automotive industry, describing them as causing "chaos" and potentially "devastating" and "blowing a hole in the U.S. industry that we’ve never seen."

Q: What is the current impact of tariffs on the industry?
A: The 25% tariffs on steel and aluminum, as well as threatened levies of the same amount on Mexico and Canada, are currently adding "a lot of cost, and a lot of chaos" to the industry.