GM Plans to Offset Up to 50% of Potential Tariff Costs, Ford Calls It 'Chaos'

General Motors has a strategy in place to reduce the impact of potential tariffs on auto parts and vehicles imported from Canada and Mexico, CEO Mary Barra said Feb. 11. Speaking at a Wolfe Research investment conference, Barra detailed how the automaker could offset between 30% and 50% of the additional costs if tariffs are implemented, without requiring additional capital expenditures.
“We are prepared,” Barra said. “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.”
GM Chief Financial Officer Paul Jacobson added that if tariffs persist, the company could take further actions, including adjusting production and supply chains.
The comments are GM’s most detailed response to concerns over the potential financial impact of new tariffs, an issue that had gone unaddressed during the company’s most recent earnings call -- leading to an 8% drop in GM’s stock price. GM’s manufacturing operations span both Canada and Mexico, producing a mix of lower-cost electric vehicles and high-margin full-size pickup trucks.
Barra’s remarks follow those of Ford Motor Co. CEO Jim Farley, who criticized the tariff threats, calling them a source of “chaos” for the U.S. auto industry. He pointed to the current 25% tariffs on steel and aluminum, along with the possibility of similar duties on Mexican and Canadian imports, as major disruptors.
“So far, what we’re seeing is a lot of cost, and a lot of chaos,” Farley said at the same conference. He warned that a 25% tariff on auto imports from Mexico and Canada, potentially taking effect as soon as March 1, would be “devastating” and could “blow a hole in the U.S. industry that we’ve never seen.”
Farley emphasized Ford’s reliance on domestically sourced steel and aluminum but noted that tariffs on international suppliers could still lead to cost increases. Ford CFO Sherry House added that even small cost increases from tariffs on suppliers could add up, creating financial strain on the automaker.
GM is still assessing the impact of the steel and aluminum tariffs but said it sources a “significant” portion of these materials from U.S. suppliers and has fixed pricing agreements in place to limit short-term volatility.
Both GM and Ford have engaged with the Trump administration on auto industry policies. Farley confirmed he is traveling to Washington, D.C., for the second time in three weeks to meet with lawmakers and discuss the issue.
The White House has not yet responded to Farley’s remarks, and it remains unclear whether the administration will proceed with the proposed tariffs.