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Tariffs Likely To Affect GM’s Bottom Line More Than Consumer Prices

General Motors has mostly waved off President Trump’s new tariffs on imported steel and aluminum, but analysts are more pessimistic.

Business Insider reported on Sunday that even if GM passes on half of the costs to consumers, margins will decrease and ultimately impact is financial performance. Charlie Chesbrough of Cox Automotive explained that consumers may see a $100 increase in the cost of a new car due to the tariffs, which shouldn’t impact consumers too much.

The analyst said costs for producing a $30,000 cars will likely rise by $200. If GM were to pass along $100 of the cost increase, it would hold onto the other $100. Considering GM sold 3 million cars in 2017, GM could be in for a $300 million hit that will impact its bottom line.

GM said in a statement after President Trump announced the 25 percent tax on foreign steel and 10 percent tax on imported aluminum that it purchases the vast majority of its steel from U.S. companies. GM product chief, Mark Reuss, also said the automaker’s mixed-material strategy should help alleviate major costs.

Former GM Authority staff writer.

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Comments

  1. As of right now the Tariff’s are more targeted and it seems it will hurt the farmers the worst .
    GM always comes out with a forecast on sales and profitability for any MY . And many times they over estimate their costs which is never a fluid situation .
    Passing only half the additional costs to the consumer doesn’t sound realistic as Trump just gave major Corporations a huge tax break . The full cost will end up being paid by the consumer as it usually is , this will keep the stock / shareholders happy and that is what really matters .
    If it costs me an extra $200.00 for a $30,000 car to stand up to the lopsided trade relationship with China I’ll pay it .

    Reply
  2. no need to worry. trade wars are easily won and we’ve got a stable genius at the helm.

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  3. Trump always vents a lot of talk, but does not always walk the walk.

    The tariffs for most countries are deferred until the end of April, and with South Korea (ROK), the US is reported to have concluded a deal according to which the US would continue to import 70% of the annual deliveries of steel from South Korea to the USA in exchange for doubling the quota of US cars to export to South Korea even if some of those do not conform to the South Korean regulations.

    Trump’s main concern seems to be to continue to fool his electorate by making more and more empty promises. Big Business is the only one which has really profitted from Trump’s policies so far, with the huge tax cut which has to be made up by a vast increase of the US state debt to the ruling 60 families and the whole world. China is the largest creditor of the USA. If the USA would finally start paying the Chinese deliveries instead of only delivering debt papers…

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  4. General Motors is doing a bit of fear mongering as the price of the 2018 Chevrolet Cruze is 16,975 and $100-250 to the price would mean absolutely nothing as it won’t prevent anyone from buying; further, General Motors should remember it was the US Government which bailed them out when they went bankrupt and should show a bit of loyalty to the home team by making plans to build the Buick Envision in the United States instead of importing the CUV from China.

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    1. The new Silverado also.

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  5. General Motors DID NOT get a bail out from the U.S. gov’t. Unlike what the banks and insurance companies got that no one ever whined about like they do about GM’s LOAN.
    Big difference is this helped blue collar workers not billionaires.

    Reply
  6. The GM loan is the truth

    As for the tariff and the extra $250.00 add it to the most expensive cars and let the lower priced cars stay at where they are. I don’t think one person would care if the price of a ats, cts, xts, ct6, escalade was 1k more!

    Reply

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