What Happened?
Shares of automotive manufacturer General Motors (NYSE: GM) fell 3% in the morning session after continued negative momentum as the U.S. government announced a major expansion of import tariffs to include automotive components, causing shares of automakers like General Motors to fall. The U.S. Commerce Department revealed plans to apply a 50% tariff on the metal content of more than 400 categories of goods, including finished automotive parts.
This move broadens earlier duties that were limited to raw steel and aluminum. The auto sector is expected to be heavily affected, with imported parts like exhaust systems, air conditioning components, and electrical steel used in EVs now subject to the new taxes. The news of the impending announcement sent ripples through the auto industry, with shares of Ford, Stellantis, and Honda also declining on the day.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy General Motors? Access our full analysis report here, it’s free.
What Is The Market Telling Us
General Motors’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 1 month ago when the stock dropped 7.3% on the news that the company reported its second-quarter earnings, which showed a significant profit decline due to tariff-related costs. Although General Motors surpassed Wall Street's revenue and profit expectations for the second quarter, its net income fell 35% from the previous year. The primary driver of this decline was a $1.1 billion hit from tariffs on imported vehicles and parts. The company warned that the financial impact from tariffs would likely increase in the second half of the year. Despite the profit slump, GM maintained its full-year guidance, which it had previously lowered in May to account for an anticipated $4 billion to $5 billion in total tariff costs for 2025. To counter these pressures, the automaker is investing $4 billion to increase production at its U.S. plants, aiming to reduce its exposure to import duties.
General Motors is up 9.2% since the beginning of the year, and at $56.08 per share, it is trading close to its 52-week high of $60.20 from November 2024. Investors who bought $1,000 worth of General Motors’s shares 5 years ago would now be looking at an investment worth $1,964.
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