Dive Brief:
- General Motors expects to receive $500 million in tariff refunds for charges it paid last year for now-defunct Trump administration levies, executives said on the automaker’s Q1 earnings call Tuesday.
- CFO Paul Jacobson said the company plans to credit the returned funds as a receivable but has yet to change its free cash flow guidance because the timing of when refunds will be paid remains unclear.
- Despite the potential refund amount, General Motors is still forecasting a hefty hit from tariffs in 2026, with Jacobson pegging the total between $2.5 to $3.5 billion.
Dive Insight:
Any return General Motors gets for payments it made for International Emergency Economic Powers Act tariffs last year is a drop in the bucket because of the automaker’s exposure to other levies that remain intact.
While the Supreme Court invalidated IEEPA duties earlier this year, GM is still subject to Section 232 levies on steel and aluminum imports, which make up the bulk of its projected tariff impact, according to Jacobson. In Q1 alone, the company incurred a $200 million tariff bill, and that’s including the assumed $500 million in refunds, he added.
GM has taken measures to mitigate its outsized tariff burden, including hedging on aluminum supply and staggering its contracts with steel suppliers. On the steel front, the company has a relatively even mix across three contract types, including deals based on spot rates and longer-term agreements spanning one- and two-year terms, according to Jacobson.
“So that’s helped us quite a bit,” Jacobson said. “During times when prices go down, we pay a little bit more, but we pay a little bit less when prices go up.”
The company has previously employed additional mitigation tactics, such as “short-term shifts” in production to the U.S. and other manufacturing adjustments, as well as “targeted cost initiatives and consistent pricing,” executives said last July.
“We expect 2025 self-help offsets to continue in 2026 and are pursuing additional opportunities to further mitigate these costs,” Jacobson said Tuesday.
