Tariffs have been in the headlines ever since President Donald Trump’s inauguration. Some of the tariffs the Trump administration has imposed or threatened have major implications not only for global trade, but for the U.S. car market and manufacturing. However, GM has a strategy for whatever trade disruptions might occur.
Paul Jacobson
GM CFO Paul Jacobson spoke at the Barclays 42nd Annual Industry Conference on Wednesday about the automaker’s strategy for dealing with impending tariffs. “We can’t be surprised by where we are today,” Jacobson said. “I think the President started talking about this in November, and we started planning in November for this eventuality. We have a playbook, I won’t go into all the details of the playbook.”
One short-term strategy that may seem obvious is simply shipping more cars to the U.S. before any new automotive tariffs kick in. “We talked a little bit about it last week, that we reduced our inventory held at our international plants by more than 30 percent,” Jacobson continued. “And we’re continuing to focus on getting that down because the last thing you want is a bunch of finished inventory that just suddenly became 25 percent more expensive, just with a passage of time. So we’re trying to be as lean as we possibly can in working with our logistics partners to move things across which we’ve done.”
In other words, GM is hurrying up and getting as many foreign-built cars from its international plants in Canada, Mexico, South Korea, and China into the United States as quickly as possible. This could lead to some temporary inventory bloat for American dealerships for cars like the Canadian-built Chevy Silverado, the Korean-built Chevy Trax and Buick Envista, the Mexican-built Chevy Equinox EV and Cadillac Optiq, and the Chinese-built Buick Envision.
As for that “playbook” that Jacobson referred to, part of the strategy is reallocating production between plants, which he says can be done at a “relatively low cost,” stating that “they’re not free, but they don’t require a lot of capital, they don’t require a lot of construction, but there’s shifts and things and balance of production that we could move around and help to ease that burden.” Jacobson added that General Motors is “one of the more prepared companies [for tariffs] in terms of this playbook that we have.”
Comments
They need to bring a 3.6L, fast.
You forgot to mention the Diesel.
Do we think Trump will apply tariffs retroactively to imported cars in dealers’ inventories? I put nothing past him.
That’s typically not feasible. The tariff is typically applied literally physically at the port of entry. You pay the tax/tariff and then they release your container. But it’s not impossible.
New car buyer,
No, the cars on the lots are already here and paid for.
You can bet as Vehicles prices rise due to tariffs the dealers will start raising the prices of the cars already sitting on Lots.
Yes, dealers use anything to tack on a few more dollars in order to line their pockets. Dealers & politicians have a lot in common.
Yeah, people claim they voted for him because of the economy and high prices and he’s just driving up costs to consumers. Good job America.
What happened to the thumbs up and down…well the higher down value I think they made a mistake in interpreting your comment….LOL should all be thumbs up to agree with you! LOL
I seriously doubt these tariffs are ever implemented. I think Trump just wants other nations to open their markets to us, not so much to close ours down to them. He’s grandstanding and publicly negotiating right now to, hopefully, improve our exports.
Right now if GM were to send a Michigan-built Cadillac CT5 to Germany, a 10 percent tariff would be levied on it upon arrival. However if BMW ships a 5-Series into the US from its Dingolfing plant, the duty is only 2.5 percent. Therefore a $60,000 BMW ends up costing an American $61,500 but a $60,000 Caddy in Germany would cost their citizens $66,000.
We absolutely should have a level playing field. I don’t understand why the US has allowed these disparities to exist for so long. I think the most likely effect of all the threats is that the EU drops its tariffs to 2.5 percent to reach parity with the US.
That is almost comical when they claim the economy is going to tank because of the tariffs. This leveling of the playing field should have been done for years, & there is no reason for it not to be done. Your example shows very well how other countries treat the USA, but don’t like it when it’s done to them.
Where in the world do they want to buy US built vehilces in any sort of volume?
Fun fact: BMW Spartanburg and Mercedes export about 200 k units each per year.
exactly
Rocker 3,
I disagree. Trump is a poor excuse for a businessman. Everything he touches dies.
Curious, how’s your net worth compare to his. Let’s say he’s off by even 4 Billion…..he’s still far wealthier than you.
jeffhoutx84,
I did not inherit millions of dollars from my father. Trump says he didn’t, but that’s just another lie. He did. I haven’t spent my lifetime ripping other people off. The only person Trump cares about is himself, I could never be like that. Even with all Trump’s money, he is miserable. I on the other hand are happy and content.
Oh boy here’s another liberal with TDS!
please return all the increase in $$$ President Trump put in your 401k account during his first term. I’m sure ol’ Joey sucked you dry.
I see GMA is a bunch of cowards and didn’t allow comments on their post about the felon’s tariff plans.
“[felon’s regime] To Introduce 25 Percent Tariffs On All Imported Cars In April”
rEVvolutionary,
Have you seen the latest video with President Musk dancing around a stage with a chainsaw laughing. He thinks ruining the lives of our federal employees is fun and funny.
Trump and his handler Musk, are running this country as if it were one of Trump’s cheesy immature reality TV shows.
This is deranged, and despicable behavior.
Dont worry when he is on his drugs he will fall on it. Should we be so lucky.
imanjunk, I forgot about musklania’s drug use. He was on the national TV., on that fruit loop Joe Rogan’s show smoking pot.
Do you think musklania and Trump are smoking pot and doing psilocybin – mushrooms together ? Maybe it’s just Trump’s dementia getting worse. Trump can’t seem to remember from one day to the next what he has said.
Just think. Had the DNC let Bernie Sanders win the primary years ago instead of selecting Hillary, we wouldn’t be here. Then they forced Harris on to Americans. You’d think they would learn.
Buicks are on a FAST boat from China.
I’m Canadian. Musk is Canadian, but we don’t want to acknowledge that anymore after what he’s doing to America. Sorry for that. BTW…great hockey game last night, eh?
HMK,
You want him back. The USA is already sick of him. I figure maybe we could dump him back on Canada before you guys revoke his citizenship.
It was a good hockey game last night. I would have liked it more if the US won, You Can’t Always Get What You Want. Just as true today as it was when Mick Jagger and the Rolling Stones sang it in 1969.
I live between Buffalo and Niagara Falls. I go to Sabres games all the time. The arena attendance is low because the Sabres are so bad. When the Leafs come to play them you would think you are in Toronto. There is more Leafs fans than Sabres fans. It is always a good time, come and see us.
In the future don’t dump your garbage, AKA Elon Musk over here.
HMK,
Elon Musk place of birth is Africa. They don’t want to acknowledge that anymore either.
The result of Trump’s clumsy approach to dealing with the issues will be visable in a few months.
In looking at all the support for him in the comments above is in line with the UAW’s betrayal of Biden. He was the first sitting President to walk a picket line that gave them the best contract in history – over 40% gains in the 3 year contract. Then they refuse to endorse him and vote for a failed businessman who promised he would lower their grocery bill. Biden was a sweetheart to the auto industry along with infrastructure and chip manufacturing and then got the shaft from the people he helped the most.
Now those workers/voters will get the shaft when inflation spikes, the economy crashes and Medicare and Social Security meet the chain saw.
Let’s see how the thumbs up/thumbs down look when his policies come home to roost.
Joe M,
I worked for 40 years at GM. Quite frankly I don’t know any GM people that voted for Trump, or would admit to it.
From my perspective it was about 50-50.
People can’t spend more than you make and neither can the government. It’s time to balance the budget. Sorry Dems, no more freebees.
You should be sorry for all the American working people, even for those who have been voting Republican for generations. It’s not about “Dems” or GOP. It’s about the King and his obedient servants. Lots of American people (about 70 millions) will live in fear that their Social Security check will cease to arrive on time or not at all.
Mike Berg,
We wouldn’t be in this much trouble if it wasn’t for the way that Trump ran up the deficit in his first presidency.
spot on…they’ll whine no matter what good comes from it.
Won’t affect me one way or another. Vehicle manufacturers priced me out of the new car market a long time ago.
Bobb langland,
There may still be a new car in your future.
Endeavor to persevere,
John Z.
Hey Mark take a lesson in economics. trumps 2017 tax cuts to corporate America raised the deficit 1 TRILLION dollars allowing stock buy backs by those corporations [800000000000 dollars] artificially elevating the stock market.
We’ve owned a number of GM cars over the years. Both new and used. They have mostly been pretty good. My wife’s 2015 Buick Verano has been the most reliable car we have ever owned. I just think it is a shame that GM, Ford and Stellantis have largely abandoned the working class market for new cars. GM sort of is still in that market with S Korea and China sourced vehicles. But nothing in that class Made in the USA. We will be looking at the USA made Subaru Crosstrek Limited, Honda Civic Hatchback hybrid, or Corolla Cross hybrid for my wife’s new car next year. She wants something small and affordable not a $90k mega truck,
Barra thought she was being cute by procuring almost half of gm’s sales from low-wage countries, while US plants sit idle or underutilized. Now it’s coming back to bite her in the rear.