GM exec explains how he beat tariffs in 2025

Tariffs were a big part of the story in 2025 for US automakers like General Motors.

The initial 25% duty levied on all auto and auto parts imports affects each of the Detroit Big 3 automakers differently, as each manufactures a different number of vehicles in the US.

Ford, for example, builds about 77% of its vehicles in the US GMMeanwhile, it imports more vehicles into the US annually than Japanese automaker Toyota. About half of the vehicles it sells in the US come mainly from Korea, Canada and Mexico.

According to the researcher GlobalDataGM sold 1.23 million imported vehicles in the US in 2024. Meanwhile, Stellantis sold 564,600 imported vehicles, while Ford sold only 419,000.

In early 2025, GM said it expects $4 billion to $5 billion in fees for the year, roughly $2 billion of which is attributable to Korea.

But last year, the US agreed to cut South Korea’s tariff rate from 25% to 15% in exchange for a $350 billion investment from the Asian nation, and while there have been recent hiccups in the deal, the lower rate could save GM billions by 2026.

<em>GM paid $3.1 billion in fees last year.</em>Photo by VCG at Getty Images” loading=”eager” height=”636″ width=”960″ class=”yf-lglytj loader”/></div>
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General Motors’ tariff impact ebbed and flowed throughout 2025.

Fee payments fell by $2.8 billion Adjusted automotive free cash flow in the second quarter of General Motorsresulting in a decrease of $2.5 billion year over year.

In the third quarter, which ended in October, GM reported a $1.1 billion tariff impact on its adjusted EBITresulting in an overall decline of $700 million year over year.

Without the tariffs, GM would have reported EBIT-adjusted margins of 9%; with tariffs, it posted margins of 6.2%.

GM reported its fourth-quarter and full-year results on Tuesday, Jan. 27, finally painting a clear picture of the impact the tariffs had on the company.

GM ended up paying another $700 million in tariff costs in the fourth quarter, bringing its total for the year to $3.1 billion. While $3.1 billion is a big expense to incur seemingly out of nowhere, it was below the company’s expected range of $3.5 billion to $4.5 billion.

“When we provided updated guidance in October, we were tracking toward the low end of this range, but we took a conservative approach given the dynamic trade and tariff environment,” said Paul Jacobson, the company’s chief financial officer. earnings call tuesday “We were able to do even better based on strong execution and favorable policy developments during the quarter, including the benefit of a lower tariff rate for Korea.”

GM says it was able to offset more than 40% of its gross tariff costs through a combination of onshoring production and other “cost reduction initiatives.”

GM plans to overhaul its manufacturing footprint in 2026.

While the company sold more vehicles and had the largest market share of any US car company, it still imported most of the vehicles it sold here.

However, CEO Mary Barra says the company plans to increase its annual U.S. production to an industry-leading 2 million units after it begins production of the Chevrolet Equinox in Kansas and the Chevrolet Blazer in Tennessee, and adds capacity at its Orient Assembly plant in Michigan.

While the company announced a $4 billion investment in U.S. manufacturing that will add up to 300,000 units of annual capacity for high-margin light trucks, full-size SUVs and crossovers, it also has no plans to scale back its Korean operations.

“We’ve had the operation in Korea for a long, long time. It’s a very efficient operation that we’re very proud of.” Barra said during the company’s second quarter earnings call.

GM imports entry-level Chevy and Buick sedans from Korea that retail for less than $30,000.

“The vehicles we produce there are in high demand … So I think we’re in the right place where we are now,” Barra said.

GM says its shift to electric vehicles cost the company $7.2 billion in special charges over the previous three months as “a realignment of electric vehicle capacity and investments to adjust for expected declines in consumer demand for electric vehicles” forces it to pivot.

GM had expected to report net income of $7.7 billion to $8.3 billion this year; however, thanks to electric vehicle charges, it posted full-year net income of $2.7 billion.

GM considers the electric vehicle adjustment a one-time “special charge,” so the sudden loss of more than $7 billion from its bottom line hasn’t dampened its outlook going forward.

To reassure shareholders, GM is giving them what they love best: a share buyback and raise dividends.

GM announced that it is board of directors approved a new $6 billion share buyback program as well as a 3 cents per share increase in its quarterly stock dividend to 18 cents per share. The new rate will be paid on March 19 to shareholders registered on March 6.

The company says it wants to reward shareholders because its overall strategy is working.

“For several years, GM’s strong brands and winning vehicles, as well as our technology-driven services and operational discipline, have consistently generated strong cash generation,” said CEO Mary Barra.

“This has allowed us to execute all phases of our capital allocation strategy, from investing in the business and our people to maintaining a balance sheet and return of capital to shareholders. We believe this formula is sustainable, which is why we are increasing our dividend and planning future share buybacks.”

This story was originally published by The Street on January 28, 2026, where it first appeared in the automotive section Add TheStreet as a Preferred Source by clicking here.

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