President Donald Trump’s plan to use tariffs to rightsize trade deficits, onshore manufacturing, and bring in extra revenue to reduce the federal deficit certainly has its defenders.
The Coalition for a Prosperous America is an advocacy group founded in 2007 by farmers, ranchers, manufacturers, and labor representatives.
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The group penned a defense of Trump’s tariff plans in February 2024 after the taxes started getting scrutiny on the business news networks. The CPA said the tariffs “led to significant reshoring” during the first Trump administration.
The group, which sits on the advisory board for Project 2025, said President Trump’s approach provides “an escape from the rigid ‘trade is always good’ dogma that U.S. economists have preached since the start of hyperglobalization 30 years ago.”
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The attractiveness of this approach doesn’t appeal ony to the right side of the political aisle, either.
United Auto Workers union leader Shawn Fain was completely in the tank for Trump’s 2024 election rival Kamala Harris, even appearing with her at a rally in Michigan weeks before the election.
However, since Trump’s election, Fain’s stance has changed.
“We’re in a triage situation,” Fain told ABC News in March. “Tariffs are an attempt to stop the bleeding from the hemorrhaging of jobs in America for the last 33 years.”
But while there is a case to be made for tariffs, business leaders worldwide know that volatility is bad for business.
General Motors (GM) is one of the first automotive dominoes to fall due to tariff-related volatility.
General Motors is facing some uncertainty in the face of tariffs.
Image source: Bill Pugliano/Getty
GM takes drastic measures to combat tariffs
General Motors had a busy Tuesday after reporting its first-quarter financial results.
The Detroit automaker announced that it is pulling its guidance for 2025 and pausing $4 billion in share buybacks until it gains more visibility on U.S. tariffs. It also pushed a conference call with analysts scheduled for Tuesday to May 1.
“Because the original guidance didn’t include impact from tariffs, prior guidance can’t be relied upon,” Paul Jacobson, the company’s chief financial officer, said. “We will update when we have more information on tariffs.”
The company had previously expected to earn between $11 and $12 per share this year. In January, it announced plans for $6 billion in new share buybacks, including $2 billion in the second quarter.
During a March 5 press conference, White House press secretary Karoline Leavitt said that the president notified the respective auto CEOs “to start investing, start moving —shift production here to the United States of America, where they will pay no tariff.”
However, to make their cars in the United States, automakers have to import products from around the world.
On Tuesday, the White House provided a little more clarity.
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The White House is keeping the 25% tax on finished imported vehicles but preventing other levies from “stacking” on top of it. Thus, carmakers won’t have to pay separate tariffs for imported steel and aluminum.
The move is retroactive, so any company that paid tariffs on these items in recent weeks will be reimbursed.
A separate group of 25% tariffs on imported auto parts is scheduled to go into effect May 3, but the administration is also modifying these taxes.
Automakers can be reimbursed for those tariffs up to 3.75% of the value of a U.S.-made car for one year. That reimbursement falls to 2.5% of the car’s value in the second year and is phased out completely after that, the Journal reported.
General Motors tops analyst earnings estimates
All things considered, GM had a strong quarter.
The company reported adjusted earnings of $2.78 per share on revenue that rose 2.3% year over year to $44 billion. Analysts polled by Yahoo Finance were expecting earnings of $2.66 per share.
However, cracks are already starting to show in the company’s balance sheet.
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Despite the increase in revenue, GM’s net income fell 6.6% year over year, with automotive operating cash flow dropping 33.2% and profit margins falling 12.2%.
On Monday, the company announced that it was raising its quarterly dividend to 15 cents per share from 12 cents per share.
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