As tariffs imposed by President Donald Trump on Canada and Mexico loom – threatening to boost the cost of both vehicles and vehicle components from those major trading partners – GM CFO Paul Jacobson was upbeat regarding The General’s ability to weather the fallout of the possible trade war.
Jacobson said “I kind of look at the tariffs as another obstacle, and we’re going to have to figure it out,” but said GM is prepared for the Trump policy to a considerable degree, remarking “we’ll have to adjust to that, but I think for starters, we’ve got a good playbook.”
GM CFO Paul Jacobson.
Speaking at the Barclays 42nd Annual Industry Conference held on February 19th, Jacobson noted that rather than panicking, GM has a solid plan in place and is prepared to adapt. He said that reallocating production between plants can be done at “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 said the allocation and moving of plants if the tariffs become permanent don’t have an answer currently.
Jacobson pointed out that in terms of moving production to different facilities and optimizing distribution of production “we are one of the more prepared companies in terms of this playbook that we have.” It is this factor, according to the GM CFO, that led the automaker to say it can offset between 30 and 50 percent of Trump tariff effects.
He also said that General Motors managed to improve its EV financials to the point of achieving positive variable profit by Q4 2024 as originally planned. Electric vehicle production has been increased to the point of economic efficiency and Jacobsen said that overall the company is “making great progress” with its EVs.
Jacobson compared the Trump tariffs to other recent disruptions, observing “I think the management team should get more credit for is its ability to handle adversity coming in since COVID, and you think about what the team did through the chip shortage.”
He said that same flexibility will serve the company well dealing with the tariffs, asserting that “I think because of that mentality, I think we’re a little bit ahead of it, that doesn’t mean that there won’t be change.”
