Dive Brief:

• General Motors, which started planning for the “eventuality” of tariffs in November and has a “playbook” for dealing with them, has reduced its inventory held in international plants by more than 30% and is continuing to work to reduce it further in preparation for U.S. import levies, the Detroit-based automaker’s CFO Paul Jacobson said Wednesday at the Barclays 42nd Annual Industrial Select Conference.
• “The last thing you want is a bunch of finished inventory that just suddenly became 25% more expensive, just with the passage of time. So we're trying to be as lean as we possibly can, and working with our logistics partners to move things across,” Jacobson said, according to a transcript. 
• Jacobson, who said he couldn’t go into all the details of GM’s playbook strategy, also said it does not help to “fret” or “panic” about the tariffs, calling tariffs “just another obstacle” that the company needs to figure out as it did previously with the COVID-19 pandemic and the chip shortage. He also said that GM is comparatively well prepared for the tariffs because months ago it began planning for the imposition of import duties and is now ready to make adjustments. 

Dive Insight:

The CFO’s remarks came one day after President Donald Trump said on Tuesday that he will probably set 25% tariffs on imports of cars, drugs and semiconductors as early as April 5, though he did not identify the countries that would be targeted by the duties, CFO Dive previously reported. Trump has also set a 10% tariff on China imports and plans 25% import duties on goods from Canada and Mexico as early as March 5. 

The Trump administration’s trade priorities have “rattled” the auto industry that relies on imports for manufacturing operations, and auto executives including GM’s CEO Mary Barra have visited or spoken with Trump in recent weeks, The Wall Street Journal reported Feb. 13. 

 At a Feb. 11 conference, Ford Motor CEO Jim Farley said it would be a “signature accomplishment” if Trump was able to make the U.S. auto industry stronger by bringing more production and innovation to the U.S., as the president has proposed. Still, so far Farley said “what we're seeing is a lot of cost and a lot of chaos,” adding that “a 25% tariff across the Mexico and Canadian border would blow a hole in the U.S. industry.”  

In contrast, on Wednesday Jacobson’s comments were more focused on the path forward to adjusting to tariffs, pointing out that there were other actions GM could take that are “relatively low cost,” albeit not free, to adjust to the macro environment. However, Jacobson also noted that it’s not altogether clear which actions to take yet due to the uncertainty of how the tariffs will ultimately play out.  

“If they become permanent, then there's a whole bunch of different things that you have to think about in terms of where do you allocate plants, and do you move plants, et cetera,” Jacobson said. “Those are questions that just don't have an answer today, because I can tell you as much as the market is pricing in a big impact of tariffs and lost profitability, think about a world where on top of that, we're spending billions of capital, billions of dollars in capital, and then it ends, right. So we can't be whipsawing the business back and forth.”

In its latest earnings report on Jan. 28, GM reported a Q4 net loss of $2.96 billion, driven primarily by a $4 billion of non-cash restructuring charges and an impairment related to interest in certain China Joint ventures, compared to net income of $2.1 billion in the year-earlier period. But the company provided new guidance that it anticipated net income in 2025 in a range between $11.2 billion and $12.5 billion, above the $6 billion result for 2024. 

General Motors’ shares fell about 9% even as the company posted a better 2025 outlook than expected, as investors and analysts said the projections were “clouded” by Trump’s threat of tariffs and lower support for electric vehicles, Reuters reported.

Morningstar analysts writing on Jan. 28 said they thought the company had a good quarter, with the stock falling being an overreaction as the tariff threat was not new. Analysts also asserted GM has “high tariff exposure” due to Mexican pickup and crossover production and Canadian pickup production.