Tariffs were a major part of the story in 2025 for U.S. automakers like General Motors.
The initial 25% duties levied on all automotive and auto parts imports hit each of the Detroit Big 3 automakers differently, since each manufactures a different number of vehicles in the U.S.
Ford, for example, builds about 77% of its vehicles in the U.S. GM, meanwhile, imports more vehicles into the U.S. annually than Japanese automaker Toyota. About half of the vehicles it sells in the U.S. come mainly from Korea, Canada, and Mexico.
According to researcher GlobalData, GM sold 1.23 million imported vehicles in the U.S. in 2024. Meanwhile, Stellantis sold 564,600 imported vehicles, while Ford sold only 419,000.
Earlier in 2025, GM stated that it expected between $4 billion and $5 billion in tariff charges during the year, approximately $2 billion of which is attributed to Korea.
But last year, the U.S. agreed to lower South Korea’s tariff rate to 15% from 25% in exchange for a $350 billion investment from the Asian nation, and though there have been recent hiccups in the agreement, the lower rate could save GM billions in 2026.
GM paid $3.1 billion in tariff fees last year.Photo by VCG on Getty Images ·Photo by VCG on Getty Images
General Motors’ tariff impact ebbed and flowed throughout 2025.
In the third quarter, which concluded in October, GM reported a $1.1 billion tariff impact on its adjusted EBIT, resulting in a $700 million year-over-year decline overall.
Without tariffs, GM would have reported EBIT-adjusted margins of 9%; with tariffs, it reported 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 tariffs had on the company.
GM ended up paying another $700 million in tariff costs in the fourth quarter, bringing its full-year total to $3.1 billion. While $3.1 billion is a significant expense to incur seemingly out of nowhere, it was below the company’s predicted range of $3.5 billion to $4.5 billion.
“When we provided updated guidance in October, we were tracking towards the low end of this range but took a conservative approach given the dynamic trade and tariff environment,” CFO Paul Jacobson said during the company’s earnings call Tuesday. “We were able to do even better based on strong execution and favorable policy developments during the quarter, including the benefit from 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 the most vehicles and had the largest market share of any car company in the U.S., it still imported the majority 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 starts 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-duty pickups, full-size SUVs, and crossovers, it also has no plans to shrink its Korean operations.
“We’ve had the operation in Korea for a very, very 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 under $30,000.
“The vehicles that we produce there, they’re in high demand….So I think we’re in the right place where we are right now,” Barra said.
GM says its shift away from 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 to expected declines in consumer demand for EVs” forces it to pivot.
GM had expected to report net income between $7.7 billion and $8.3 billion this year; however, thanks to the EV charges, it reported full-year net income of $2.7 billion.
GM views the EV adjustment as a one-time “special charge,” so the sudden loss of more than $7 billion from its bottom line hasn’t dampened its outlook for the future.
To reassure shareholders, GM is giving them what they love the most: share buybacks and increased dividends.
GM announced that its board of directors approved a new $6 billion share repurchase program, as well as a 3-cent-per-share increase in its quarterly stock dividend to 18 cents per share. The new rate is payable March 19 to shareholders of record on March 6.
The company says it wants to reward shareholders because its overall strategy is working.
“For several years now, GM’s strong brands and winning vehicles, as well as our technology-driven services and operating discipline, have delivered consistently 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 strong balance sheet and returning capital to shareholders. We believe that formula is sustainable, which is why we’re increasing our dividend and planning future share repurchases.”
