GM CEO on Trump Tariff Impact, Earnings

As General Motors (GM) CEO Mary Barra faces the reality of Trump's tariff policies, she's been vocal about the impact on the company's earnings and market position. In a recent letter to shareholders, Barra acknowledged the uncertainty over trade, tax, and environmental regulations in the United States, stating that GM has been proactive with Congress and the administration of President Donald Trump. But how have these policies affected GM's earnings and stock performance, and what can investors expect in the future?

First, let's look at the numbers. GM swung to a loss in the fourth quarter on huge charges related to China, but still topped profit and revenue expectations on Wall Street. For the three months ended Dec. 31, GM lost $2.96 billion, or $1.64 per share, compared to a year earlier when the company earned $2.1 billion, or $1.59 per share. Stripping out the charges and other items, GM earned $1.92 per share in the quarter, beating the $1.85 per share that analysts surveyed by FactSet predicted. Revenue climbed to $47.7 billion from $42.98 billion, beating Wall Street's estimate of $44.98 billion.

Now, let's dive into the impact of Trump's tariff policies on GM's earnings and stock performance. According to S&P Global Ratings, GM could lose up to 17% of its annual EBITDA in a worst-case scenario, with the percentage of EBITDA at risk being above 20% for GM and Stellantis. This is due to their heavy reliance on Mexican manufacturing for key models, such as GM's Silverado and Sierra pickup trucks. The proposed tariffs could also disrupt supply chains and increase costs for these automakers.

Under a new administration, the impact of tariffs on GM's earnings and stock performance could change. If the new administration reverses or modifies the proposed tariffs, GM could potentially avoid the significant financial losses and supply chain disruptions. However, if the new administration maintains or increases the tariffs, GM's earnings and stock performance could continue to be negatively affected.

In addition to tariffs, the new administration's policies on electric vehicle (EV) tax credits could also impact GM's earnings and stock performance. If the new administration repeals or reduces the $7,500 tax credit for qualifying battery electric vehicles and plug-in hybrids, this could dampen EV sales and pressure GM's margins, potentially leading to a reduction in EV investments.

Overall, the new administration's policies on tariffs and EV tax credits will play a significant role in determining the future impact on GM's earnings and stock performance. Investors should keep a close eye on these developments and adjust their portfolios accordingly.