General Motors believes it can offset up to 50% of the potential tariffs that President Donald Trump has threatened to impose on imports from Canada and Mexico, CEO Mary Barra said on Tuesday.
The Detroit automaker has contingency plans in place should tariffs be applied to auto parts and vehicles entering the U.S. from these neighboring countries. According to Barra, GM could potentially avoid short-term impacts amounting to between 30% and 50% of the additional costs “without deploying any capital.”
“We are prepared,” Barra stated during a Wolfe Research investment conference on Tuesday. “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 CFO Paul Jacobson, who joined Barra at the event, added that if tariffs persist, the company could implement further measures, such as shifting production of parts or vehicles.
These remarks mark GM’s most detailed response yet regarding its ability to manage the impact of tariffs. Previously, investor concerns over this issue had gone unaddressed during the company’s quarterly earnings call two weeks ago, contributing to an 8% drop in its stock.
GM maintains some operations in Canada, with more extensive production in Mexico, where it manufactures many of its lower-priced electric vehicles as well as its highly profitable full-size pickup trucks.
Barra’s comments followed remarks from crosstown competitor Ford Motor CEO Jim Farley, who said Trump’s tariffs—whether enacted or merely threatened—are creating “chaos” in the U.S. automotive industry.
GM Manufacturing
Farley described the recently imposed 25% tariffs on steel and aluminum, along with the proposed levies of the same amount on imports from Mexico and Canada, as driving “a lot of cost, and a lot of chaos” within the industry.
“President Trump has talked a lot about making our U.S. auto industry stronger, bringing more production here, more innovation in the U.S., and if his administration can achieve that, it would be one of … the most signature accomplishments,” Farley said separately during the Wolfe conference. “So far what we’re seeing is a lot of cost, and a lot of chaos.”
Farley and incoming Ford CFO Sherry House noted that the majority of Ford’s steel and aluminum is sourced domestically. However, some of the company’s suppliers obtain these materials from outside the U.S., which could result in increased costs.
Barra stated that GM is currently “evaluating” the effects of the steel and aluminum tariffs on its business but noted that the company sources a “significant” portion of both materials domestically. In the short term, she added, GM has fixed pricing agreements on such purchases.
Both GM and Ford contributed $1 million each, along with vehicles, to Trump’s inauguration. Executives from both companies have also confirmed they have engaged in discussions with Trump regarding the auto industry.
On Tuesday, House emphasized that Ford’s primary concern is how these incremental actions—including those affecting suppliers—could cumulatively have a negative impact on the company’s operations.
“We’ll have to deal with it. That’s what I’m talking about—cost of chaos. A little here, a little there. … This is what we’re dealing with right now,” Farley said.
