Long gone are the days when an imported car meant a foreign car. And no company proves the point more than General Motors Co.
The Detroit stalwart imported more cars into the U.S. last year than any other automaker, even Japan’s Toyota Motor Corp. Nearly half of the vehicles GM sold in the U.S. last year – 1.23 million autos – were built abroad, according to researcher GlobalData. That includes many of its most affordable models, like the Korean-made Chevrolet Trax and Buick Envista SUVs, whose low prices depend on cheap production.
Now, no American automaker stands to lose more in U.S. President Donald Trump’s trade war. Trump has slapped 25% tariffs on imported autos, arguing it’s a response to unfair barriers that American-made cars face in other countries. But the tariffs have GM scrambling to manage levies of up to US$5 billion this year, which despite some offsets will slash 2025 earnings before interest and taxes by about 20%, the company estimates.
Other U.S. automakers – the very companies Trump says he’s trying to help – will suffer as well, if not quite as much as GM. Except for Tesla Inc. and startups like Lucid Group Inc. and Rivian Automotive Inc., they all build cars elsewhere to sell in the US. Ford Motor Co. on Monday said it is facing a $2.5 billion tariff hit this year, which it aims to offset with $1 billion in cost savings.
“It used to be that when you bought a Toyota, it was made in Japan and when you bought a Chevy, it was made here in the U.S.,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. “Now, some Toyotas are made in Japan and some are made in the U.S. And if you buy a Chevy, it might have been made overseas.”
GM shares have fallen more than 14% this year as tariffs and an uncertain economy weighed on the stock. Among American automakers, only Ford, which has the lowest tariff exposure, has seen its shares gain this year. GM shares rose less than 1% to $45.66 at 9:32 a.m. in New York.
GM will use cost cuts to offset 30% of its tariff impact, rather than raise prices on its cars, Chief Financial Officer Paul Jacobson told reporters last week. It also is moving production of some models, including pickup trucks, into its U.S. factories. Analysts say GM could get some relief if a new trade agreement can be reached with South Korea, where the company operates three factories.
“There are ongoing discussions with key trade partners that may also have an impact,” Mary Barra, GM’s chief executive officer, said in a May 1 letter to shareholders. “We will continue to be nimble and disciplined.”
GM said in an email that it can’t comment on its import strategy.
The automaker remains committed to its Korean operations, which play a critical role as a global export base for GM’s lower-priced models, a company official said, asking not to be identified because the plans were confidential.
GM, Ford and Chrysler-parent Stellantis NV combined to import 2.2 million cars into the U.S. last year – or about 28% all automobiles that crossed the U.S. border from foreign nations. They aggressively lobbied the White House for a break on tariffs and won a partial reprieve April 29 when Trump agreed to phase in tariffs on auto parts over two years, giving companies time to move production to the U.S. He also exempted them from paying additional levies on materials such as steel and aluminum.
Stellantis imports about 44% of the Chryslers, Dodges, Jeeps and Rams it sells in the U.S. Ford is less exposed, relying on imports for about 21% of its domestic sales.
It isn’t just GM’s large number of imports, however, that makes the company so vulnerable to Trump’s tariffs. It’s also the location of some of its foreign factories.
Cars made in Korea bear the full brunt of the 25% tariffs that went into effect April 3, accounting for $2 billion of GM’s import exposure. GM also imported nearly 55,000 cars last year from China, which now face a tariff of 145%.
In contrast, vehicles that GM and other Detroit automakers produce in Canada or Mexico face lower levies, because Trump gave a break to cars that comply with the U.S.-Mexico-Canada free trade agreement he negotiated in his first term. Ford said Monday it is looking to make more auto parts in the U.S. but has no plans to curtail production at two Mexican factories that produce the Maverick small pickup, Bronco Sport SUV and electric Mustang Mach-E.
GM’s history in Korea dates back more than 50 years. The company grew to become South Korea’s third-largest automaker after it acquired the assets of Daewoo Motors in 2002. The country is now essential to GM’s ability to produce low-cost vehicles like the Trax or the Chevrolet Trailblazer, both of which start under $25,000, and export them globally.
Jeff Schuster, former vice president of research at GlobalData, projects that car makers selling in the U.S. will cease building 1.5 million mostly lower-priced vehicles because the tariffs will make them uncompetitive. That would worsen an auto affordability crisis in the U.S., where the average price of a new car tops $48,000, up 21% from five years ago.
“It does take away the entry market and obviously hurts those buyers that are in that space,” Schuster said. “The collateral damage on that consumer is probably greater than is being anticipated.”
Trump’s larger goal is to build more cars in the U.S., and to some extent, that’s already happening. Korea’s Hyundai Motor Co., which imported more than 1.1 million cars into the U.S. last year, announced in March a $21 billion U.S. expansion plan, with a goal of doubling production in the states. Toyota, meanwhile, has ramped up U.S. manufacturing, with nearly half of the cars it sold in the country in 2024 coming from domestic factories.
“Our philosophy has always been to build where we sell and buy where we build,” Toyota said in a statement. “With over $50 billion invested in the U.S., including 10 manufacturing plants and more than 49,000 direct jobs, we are fully compliant with the USMCA trade agreement and will continue to deepen our investments in America.”
Even if Trump succeeds in forcing companies to build more vehicles in the U.S., it may not produce a jobs boom. Automakers will find ways to protect profits and offset higher production costs in America, according to Mark Wakefield, global auto market lead for consultant AlixPartners.
“If you move a job from Mexico to the U.S., you’re going to add more robot sales than you are jobs, because you’re going to end up automating a lot of things,” he said.
With assistance from David Welch.
Keith Naughton, Bloomberg News
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