But the answer to the bigger question—whether these steep penalties will compel GM to move a more meaningful chunk of its vehicle production back to the homeland—remains as vague as ever.
“We have excess capacity in the U.S. with the plants that we already have, so that allows us, if we want to make adjustments, we can do it,” Barra said on a conference call with analysts on Thursday. She and GM CFO Paul Jacobson noted that the company has more plans to increase vehicle production in the U.S. going forward, but did not share any details.
“The footprint responses and supply chain responses, et cetera—that’s what’s going to take a little bit of time,” Jacobson said on the call. “So as we continue to go through, we’ll provide more detail on our progress on each of those.”
Asked by an analyst on the call about reshoring auto manufacturing to the U.S., Barra said, “I think we also get fixated on where final assembly is versus all the powertrain plants that we have here, the stamping plants, the fact that we’ve invested in two battery plants and that’s what allows us to have such high USMCA compliant parts.”
On Thursday’s earnings call, General Motors executives said the company should benefit from those adjustments as it builds about 1.5 million of its fleet in the U.S. each year. Jacobson said on the call that GM’s “primary location for sourcing parts” for assembly in America was the U.S. and that it counted for “well over half” of its annual parts expense. The new adjustments “will help mitigate a substantial portion of tariffs on parts going into those vehicles and help avoid added costs on U.S. vehicle production,” CFO Jacobson said.
But even with these mitigations taken into account, Jacobson said that the tariffs will ultimately lower GM’s projected annual earnings before income tax to between $10–$12.5 billion, down from the $13.7–$15.7 billion it had estimated at the beginning of this year. Jacobson specified that around $2 billion of the tariff expenses will stem from vehicles imported from Korea, as well as Mexico and Canada and higher costs for imported indirect materials.
