General Motors Cuts 2025 Forecast Due to U.S. Tariff Policies, Expects a $5 Billion Cost Impact

Taiwan • Business • 05/01 12:31
General Motors Cuts 2025 Forecast Due to U.S. Tariff Policies, Expects a $5 Billion Cost Impact

General Motors (GM) has revised down its 2025 financial forecast due to the U.S. imposing a 25% tariff on imported cars and parts, which is anticipated to raise costs by $5 billion. This move impacts GM's profit outlook, forcing GM to suspend its stock repurchase program and withdraw its full-year earnings guidance. The U.S. has eliminated the "de minimis" exemption for Chinese imports, putting pressure on e-commerce retailers dependent on the Chinese supply chain, highlighting the effects of shifts in U.S. trade policy on corporate operations.

Key Updates

05/01 18:32

April manufacturing data from the U.S. affects expectations for a rate cut, U.S. bond market falls.

In April, U.S. manufacturing activity shrank less than anticipated, as the ISM manufacturing index dropped to 48.7, surpassing the forecast of 47.9, prompting a revision in market expectations for a Federal Reserve rate cut this year. U.S. Treasury yields bounced back from their lows, with the 10-year Treasury yield rising to 4.208%. Federal funds futures suggest the likelihood of a June rate cut has dropped to 58%. This shift highlights the market's sensitivity to economic data and how policy expectations affect the bond market.

05/01 18:01

Microsoft is raising Xbox prices to $380 for the Series S and $600 for the Series X due to the trade war and increased development costs.

On May 1, 2025, Microsoft announced a price increase for the Xbox Series S and Series X consoles, accessories, and some games, effective immediately. The Series S has risen to $380, and the Series X has risen to $600. Prices for accessories like wireless controllers and headsets have also increased. Microsoft stated that the price adjustment is due to market conditions and rising development costs, affected by trade wars and supply chain pressures. This move makes Microsoft the latest company, after Sony and Nintendo, to adjust gaming hardware prices.

05/01 17:01

In April 2025, the US manufacturing PMI index fell to 48.7, indicating a continued contraction.

In April 2025, U.S. manufacturing activity further contracted, with the ISM Manufacturing PMI dropping from 49.0 in March to 48.7, staying below the 50-point mark for the second month in a row, signaling a contraction. Even though there was a slight improvement in new orders and employment, the decline in output, rising price pressures, and fewer export orders highlight multiple challenges. Uncertainty around tariff policies and supply chain bottlenecks are adding to the pressures on businesses.

05/01 17:01

Decline in U.S. Retail Performance in Q1 2025: Pressure from Tariff Policies Affects Consumer Confidence

In the first quarter of 2025, the annual U.S. GDP rate declined by 0.3%, marking its first contraction in three years, mainly due to a surge in imports and the effects of tariff policies. Financial reports from brands such as McDonald's, Harley-Davidson, and Estée Lauder indicate declining sales and weakened consumer confidence. The U.S. imposed tariffs as high as 145% on Chinese goods, resulting in a surge in imports and a record trade deficit. The consumer confidence index dropped to its lowest point since the pandemic, highlighting the adverse effects of tariff policies on the economy.

05/01 13:01

One Month into the US-China Trade War: Chinese Stationery Exporters Resume Shipping to the US, with Tariff Costs Passed on to American Customers

As trade tensions between the US and China heat up, with both sides imposing high tariffs on each other, some Chinese stationery and other exporters have resumed shipments to the US because American importers are facing urgent inventory shortages and struggling to find alternative suppliers. Even though the US has imposed tariffs as high as 145% on Chinese goods, the cost is passed on to American customers and is reflected in retail prices, indicating the market's dependence on Chinese-made products.

05/01 12:31

General Motors Cuts 2025 Forecast Due to U.S. Tariff Policies, Expects a $5 Billion Cost Impact

General Motors (GM) has revised down its 2025 financial forecast due to the U.S. imposing a 25% tariff on imported cars and parts, which is anticipated to raise costs by $5 billion. This move impacts GM's profit outlook, forcing GM to suspend its stock repurchase program and withdraw its full-year earnings guidance. The U.S. has eliminated the "de minimis" exemption for Chinese imports, putting pressure on e-commerce retailers dependent on the Chinese supply chain, highlighting the effects of shifts in U.S. trade policy on corporate operations.

05/01 09:30

U.S.-China Trade War Heats Up: How American Investors Can Handle Market Risks and Economic Shocks

Amid the escalating US-China trade war and the turmoil in global supply chains, the US stock market has demonstrated resilience. Despite the first quarter GDP contraction, the S&P 500 index has only decreased by 2.4% since the announcement of tariffs. Investors underestimated the impact of the trade war and adjusted their asset allocation strategies to favor defensive assets. The dollar index declined, and international funds flowed to Europe and emerging markets. Companies are reorganizing supply chains to address risks. Small-cap stocks are facing both challenges and opportunities, consumer confidence is waning, and corporate investment remains hesitant.

05/01 00:41

Progress in tariff negotiations between the Trump administration and India: Plans to use the cancellation of the AI chip export classification system as trade leverage

At the end of April 2025, President Trump of the United States stated that the U.S.-India tariff talks are going smoothly, and a trade deal is expected soon. Officials from the U.S. Department of the Treasury and the Department of Commerce highlighted that India could be among the first to sign a trade deal in Trump's second term. Meanwhile, the Trump administration is considering scrapping the AI chip export classification system from Biden's time, choosing instead to use intergovernmental agreements for export authorization, using AI chips as a bargaining chip in trade talks, which could deeply impact the global semiconductor supply chain.

04/30 14:33

China canceled an order for 12,000 tons of U.S. pork: escalating U.S.-China trade tensions, severely impacting the U.S. supply chain.

In April 2025, China canceled an order for 12,000 tons of U.S. pork imports, marking the largest cancellation record since 2020, due to U.S. tariff measures. This move led to significant inventory and value losses for U.S. exporters, impacting the agricultural supply chain and the slaughtering and processing industries. Tariffs up to 172% limit the competitiveness of U.S. pork in the Chinese market, and China's unique demand for pork by-products makes it challenging for alternative markets to absorb the supply. The U.S. holds advantages in cost and supply flexibility, but in the short term, the market gap and pressures from supply chain adjustments are significant.

04/30 13:31

In April 2025, private sector job growth in the United States slowed to 62,000, marking a nine-month low.

In April 2025, the U.S. private sector added 62,000 jobs, which was below the expected range of 115,000 to 125,000, representing the smallest increase since July 2024. ADP data shows that companies are cautiously expanding their workforce due to uncertainties in policy and consumer behavior. This report was released two days before the U.S. Department of Labor's non-farm employment report, offering the latest insights into the labor market.

GM Lowers 2025 Financial Forecast, Tariff Costs Could Reach $5 Billion

General Motors announced this week that it is lowering its 2025 full-year adjusted earnings before interest and taxes (EBIT) forecast from the original $13.7 billion to $15.7 billion, down to $10 billion to $12.5 billion. The company stated that this revision reflects the anticipated cost pressure of $4 billion to $5 billion related to tariffs. These tariffs primarily stem from the U.S. government's implementation of a 25% import tariff on cars and parts in April 2025, covering assembled vehicles and components from countries like Mexico and South Korea.

GM CFO Paul Jacobson said, "The original forecast did not account for the impact of tariffs; therefore, it can no longer serve as a reliable basis. We will update the forecast as more information becomes available." He added that the potential impact of these tariffs on the company's profits "could be significant."

According to estimates by the Center for Automotive Research (CAR), this tariff policy will result in approximately $108 billion in additional costs for U.S. automakers in 2025, with the Detroit Big Three (GM, Ford, Stellantis) bearing about $42 billion. On average, the cost of parts for each imported vehicle will increase by approximately $4,911, and the total vehicle cost will rise by $8,641.

Tariff Policy Disrupts Corporate Planning, GM Halts Stock Buybacks and Withdraws Financial Forecast

Despite GM's first-quarter 2025 financial performance exceeding market expectations, with revenue reaching $44.02 billion, surpassing analysts' estimates of $43.26 billion, and adjusted earnings per share at $2.78, higher than the expected $2.61, the company has decided to suspend its planned $4 billion stock buyback program and withdraw its full-year financial forecast.

Jacobson noted that in addition to tariff pressures, a supplier factory fire in the first quarter also limited the production of high-margin SUVs, further affecting the company's performance. He emphasized, "We are engaged in constructive dialogue with the government, but the current policy uncertainty makes it impossible for us to provide a specific full-year outlook."

Removal of Duty-Free Clause for Chinese Imports Presents New Challenges for E-commerce Sellers

Meanwhile, on April 30, U.S. President Trump signed an executive order ending the "de minimis" duty-free clause for goods manufactured in China and Hong Kong. This clause previously allowed goods valued under $800 to be imported into the U.S. duty-free, widely used by Chinese e-commerce platforms like Shein and Temu, as well as U.S. local sellers on platforms like Etsy and eBay.

This move, described by the Trump administration as "closing a loophole" and related to combating fentanyl smuggling, has significantly impacted small and medium-sized e-commerce businesses relying on Chinese supply chains. According to The New York Times, many independent sellers in the U.S. and Canada have stated that their business models are based on low-cost imports, and the implementation of tariffs will lead to increased costs and declining sales.

GM Continues Dialogue with Government, Stresses Flexibility in Responding to Policy Changes

In a letter to shareholders, GM CEO Mary Barra stated that the company will continue to maintain close dialogue with the Trump administration and closely monitor the progress of negotiations with key trading partners. She wrote, "We will remain flexible and disciplined, and update you promptly as we receive more information."

Despite recent adjustments to some tariff policies by the Trump administration, such as allowing vehicles assembled in the U.S. to receive partial tariff exemptions, the overall policy direction continues to pressure the automotive industry. GM and other automakers like Stellantis and Mercedes-Benz have also suspended their 2025 financial forecasts, reflecting the industry's overall concern about policy uncertainty.

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