General Motors (GM) and Ford (F) said consumers should not expect cars to rise immediately, even if the company paid a huge loss for President Trump’s newly clarified tariffs on imported cars and parts. GM CEO Mary Barra and Ford CEO Jim Farley both said this week that their company will absorb the initial impact despite the levied billions – at least so far.
After months of uncertainty, the Trump administration’s latest tariff guide (announced earlier this week) provides some relief by limiting automatic related tariffs at the highest applicable tax rates rather than stacking multiple taxes. The shift helped General Motors calculate the estimated tariff costs for the year: $4 billion to $5 billion, Barra said in a shareholder letter yesterday (May 1).
“The clarity we get is very important because it enables us to make decisions for the U.S. and North America footprint,” Barra told CNN yesterday. GM has produced about half of U.S. vehicles abroad, both of which will have an impact on tariffs on imported vehicles that went into effect last month and additional tariffs on auto parts that began on May 3.
To cope with the tariff costs, GM plans to expand domestic production, including an additional 50,000 trucks at its Fort Wayne, Indiana plant each year. But Barra insists that the increased costs will not be passed on to consumers. “Pricing will remain at the same level,” she said, adding that GM will remain “very disciplined” to provide pricing incentives.
Ford took a different route by leveraging promotions. Last month, the company began expanding its employee discounts to all buyers of the 2024 and 2025 models, adding double-digit sales, Farley said. He told CNN yesterday, adding that the discount plan will now last until July.
However, Farley has more caution in its long-term impact on tariffs. “We have a lot of parts from overseas that have multiple tariffs – some of our parts are from 0 tariffs to 140% tariffs,” he said. Trump's decision to eliminate the taxation decision “cleared things” but did not rule out the final price increase.
Ford produces about 80% of its U.S. cars at home and is waiting for competitors to react to tariffs before adjusting their pricing strategies. Farley said the company will disclose its estimated tariff charges when reporting earnings next week.
