General Motors (GM) reported first quarter earnings on Tuesday morning that slightly topped expectations amid reports that tariff relief could be coming.
The biggest of the Big Three automakers said investors could no longer “rely” on its forward guidance as it grapples with the effects of President Trump’s auto tariffs. But new reporting from the Wall Street Journal late Monday night suggests the Trump White House will aid automakers by preventing tariffs on foreign-made cars stacking on top of other tariffs currently imposed by the administration.
“The decision will mean that automakers paying Trump’s automotive tariffs won’t also be charged for other duties, such as those on steel and aluminum, according to people familiar with the policy. The move would be retroactive, the people said, meaning that automakers could be reimbursed for such tariffs already paid,” according to the Journal report.
GM shares fell around 2% in pre-market trading.
Tariffs on auto parts, coming on May 3rd, would also be reimbursed “up to an amount equal to 3.75% of the value of a U.S.-made car for one year,” then 2.5% the year after before phasing out. The Journal said the White House would make the news official ahead of a Trump rally in Michigan on Tuesday night.
As a result of the latest news, GM also said it would delay its earnings conference call until Thursday.
“We appreciate the productive conversations with the President and his Administration and look forward to continuing to work together,” Mary Barra, GM chair and CEO said in a statement.
“We’re going to look for more clarity before we get into any forward projections of the tariff exposure, and that’s why we’re going to tell people that you can’t rely on the guidance that we had issued before, because we do believe that [the tariff effect] could be material,” GM CFO Paul Jacobson said on a call with reporters.
GM also said that it wouldn’t comment on any price changes at the moment, and it didn’t need to raise additional capital. The company did say it would pause any share buybacks, but it will complete its most recent $2 billion accelerated share repurchase (ASR) plan in Q2.
Read more about GM’s stock moves and today’s market action.
GM reported Q1 revenue of $44.02 billion vs $43.03 billion per Bloomberg consensus, up 2.3% compared to a year ago. GM posted adjusted EPS of $2.78 vs. $2.72 expected, with operating income coming $3.35 billion vs. in at $3.45 billion estimated. GM reported adjusted EBIT (earnings interest expense and taxes) of $3.49 billion, down 9.8% from a year ago. Jacobson said changing product mix, higher costs and foreign exchange headwinds ate into its EBIT-adjusted margin, which fell to 7.9% (down from 9.0% last year).
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