Shares of General Motors (GM) tumbled 6.54% in pre-market trading on Thursday, as investors reacted to President Donald Trump's announcement of new tariffs on imported vehicles. The sharp decline came after Trump revealed plans to impose a 25% tariff on all cars and light trucks not manufactured in the United States.
During a press conference held late Wednesday, Trump stated, "We will do 25% on all cars not made in USA," emphasizing that these auto tariffs would be permanent and go into effect on April 2. The White House said the levies will be imposed on passenger vehicles and "certain automobile parts" such as engines, transmissions, powertrain parts, and electrical components.
The announcement has sent shockwaves through the auto industry, with General Motors being particularly vulnerable due to its significant manufacturing presence in Canada and Mexico. Analysts have warned that such tariffs could severely impact automakers' profits, potentially leading to billions in losses. UBS analyst Joseph Spak projected that under a scenario with 25% tariffs and no relief for the industry, both Ford and GM could lose money in 2025.
While the full implications of these tariffs are yet to be determined, the immediate market reaction suggests that investors are deeply concerned about the potential negative impact on General Motors' operations and financial performance. The company will likely face difficult decisions in the coming months, including whether to absorb the increased costs, pass them on to consumers, or relocate production to avoid the tariffs.
