Impact of Trump Tariffs: GM Faces Up to 7 Trillion Won in Costs, Net Profit May Drop 25%
Net Profit Expected to Drop by a Quarter
GM Faces $5 Billion in Tariff-Related Costs
General Motors (GM), the American automaker, has projected that it could incur costs (exposure) of up to 7 trillion won this year due to the impact of Trump-era tariffs.
According to the Wall Street Journal (WSJ) and Bloomberg News on May 1 (local time), GM stated that its tariff-related costs this year could reach $4 billion to $5 billion (approximately 5.7 trillion to 7.1 trillion won), which could reduce its net profit by about one quarter.
Due to the effects of tariffs and other factors, GM has revised its net profit estimate for this year down from the $11.2 billion to $12.5 billion (approximately 16 trillion to 17.9 trillion won) projected in January to $8.2 billion to $10.1 billion (approximately 11.7 trillion to 14.4 trillion won).
GM is the largest automaker in the United States and also one of the country's major automobile importers.
GM's annual domestic production in the United States exceeds 1.5 million vehicles, which accounts for only about half of GM's total U.S. sales.
GM produces small cars and other vehicles overseas, including in Korea, Mexico, and Canada, to supply the U.S. market. In Korea, the company manufactures models such as the Chevrolet Trax and Buick Envista.
Paul Jacobson, GM's Chief Financial Officer (CFO), stated that imports and other costs from Korea account for $2 billion (approximately 2.8 trillion won) of the estimated tariff costs.
GM plans to offset more than 30% of the tariff costs through domestic production in the United States and to minimize the impact of tariffs by utilizing supply chain contingency measures established during the COVID-19 pandemic.
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Mary Barra, Chair of General Motors (GM), said, "We look forward to maintaining robust dialogue with the Trump administration regarding tariff policies," adding, "Discussions are ongoing with key trade partners, which could also have an impact. We will continue to respond with agility and discipline."
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