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General Motors has cut its profit guidance for the year in response to Donald Trump’s trade war, warning of up to $5bn in exposure to the US president’s sweeping tariffs.
In a letter to shareholders on Thursday, the US carmaker said it now expected to report annual adjusted earnings of between $10bn and $12.5bn before interest and taxes, compared with a previous range of $13.7bn to $15.7bn.
Just two days earlier, the company had pulled its guidance and temporarily suspended share buybacks due to the uncertainty surrounding trade with the US, marking the latest carmaker to either abandon or cut its outlook in recent days.
GM’s warning of a tariff exposure of between $4bn and $5bn came even after Trump offered some relief to the car industry earlier in the week by sparing auto companies from some of his steepest levies.
Carmakers have struggled to keep pace with the frequent changes in tariff policy, and profits have fallen during the first quarter even before the full force of the 25 per cent levies on imports of foreign-made vehicles has taken effect. Stellantis and Mercedes-Benz became the latest auto groups to pull their guidance on Wednesday.
In a speech in Michigan on Tuesday, Trump offered small rebates to carmakers that produce their vehicles in the US to offset the costs of his broader levies, as well as an exemption from the administration’s tariffs on steel and aluminium for imported parts.
“We look forward to maintaining our strong dialogue with the Administration on trade and other policies as they evolve,” GM’s chief executive Mary Barra said in the shareholder letter.
GM is widely considered the Detroit Three carmaker most exposed to the tariffs because of its wider operations in Canada and Mexico. It makes about half the vehicles it sells in the US in the two neighbouring countries, including its popular Chevrolet Silverado pick-up truck. It also imports vehicles it sells in the US from South Korea.
To mitigate the tariffs, GM has said it plans to increase production of full-size pick-up trucks at its assembly plant near Fort Wayne, Indiana, by about 50,000 units a year.
On Tuesday, GM reported adjusted earnings of $3.5bn before interest and tax in the first quarter, down 9.8 per cent year on year, on a 2.3 per cent rise in revenue to $44bn — slightly higher than the average analyst estimate, according to S&P Capital IQ.
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