GM CEO blows up theory about car prices under Donald Trump tariffs in the US

Detroit, Michigan: The Donald Trump administration’s tariffs on imported cars and auto parts are expected to cost General Motors between $4 billion and $5 billion this year. However, GM CEO Mary Barra indicated in a CNN interview that the company does not plan to immediately pass these added costs onto consumers through higher vehicle prices.

“We believe pricing is going to stay at about the same level as it is,” Barra told CNN’s Erin Burnett, though she noted that pricing in the auto industry fluctuates frequently.

Despite this, the tariffs will significantly impact GM’s earnings, prompting the company to slash its annual profit forecast. In a letter to shareholders, Barra revealed that adjusted earnings before interest and taxes are now projected at $10 billion to $12.5 billion — far below 2024’s $14.9 billion.

The financial strain has led GM to halt billions in planned stock buybacks, a move announced alongside lower first-quarter earnings. The tariffs also threaten profit-sharing payments for GM’s 45,000 United Auto Workers members, who received record bonuses of up to $14,500 last year.

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GM is the first major corporation to quantify the financial toll of Trump’s trade policies, which include a 25% tariff on imported vehicles and, starting soon, additional levies on foreign-made auto parts. While GM builds nearly 1 million vehicles annually in Mexico and Canada — mostly for US sale — it also relies heavily on imported components, with American parts averaging just 54% of its US-assembled vehicles.

Unlike in 2021, when a chip shortage slashed supply and drove prices up 17%, current economic conditions — including weaker demand and recession fears — may prevent similar spikes. A surge in March and April purchases, fueled by tariff concerns, could further soften demand, keeping prices stable.