Tariffs Force GM To Reconsider Plant Locations Outside America
General Motors could be forced to reconsider the locations of its manufacturing plants as President Donald Trump’s proposed 25% tariff on car imports threatens to disrupt the automaker’s global manufacturing strategy.
Key Points
- GM CFO Paul Jacobson suggests plant relocations and global manufacturing adjustments may be necessary if tariffs become permanent.
- The company has a "playbook" for long-term strategies
- Trump’s proposed 25% tariff on car imports threatens GM Korea’s export-dependent operations, with 88.5% of its exports heading to the U.S.
The tariff, expected to take effect as early as April 2, could significantly increase costs for automakers that rely heavily on cross-border exports, potentially adding thousands of dollars to the price of imported vehicles.
Paul Jacobson, GM’s CFO, speaking at a Barclays conference, acknowledged if the tariffs become permanent there will be knock-on effects. “If they become permanent, then there’s a whole bunch of different things that you have to think about in terms of where to allocate plants and do you move plants.”
No final decisions have been made yet, but the company has already drafted a tariff playbook for relocating plants or reallocating production. “We’ll have to adjust to that, but I think for starters, we’ve got a good playbook.”
According to reports from Korea, the impact on GM Korea could be particularly severe. The Korean subsidiary, which serves primarily as an export hub for U.S. markets, shipped 95% of its 2024 production overseas, with 88.5% heading to the United States.
The 25% tariff could skewer GM’s three Korean manufacturing plants which already face challenges due to plunging domestic sales over the last decade—the South Korean government injected 81 billion won ($56.3 million) to keep the operation afloat in 2018. Despite this, GM Korea now produces only the Trailblazer SUV for the domestic market and the Chevrolet Trax crossover and Buick Encore GX for export.
In 2001, General Motors bought most of Daewoo Motor's assets to form "GM Daewoo Auto & Technology" before it officially became GM Korea in 2011.
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An experienced automotive storyteller and accomplished photographer known for engaging and insightful content. Michael also brings a wealth of technical knowledge—he was part of the Ford GT program at Multimatic, oversaw a fleet of Audi TCR race cars, ziptied Lamborghini Super Trofeo cars back together, been over the wall during the Rolex 24, and worked in the intense world of IndyCar.
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Not really difficult as GM has excess capacity in the States. The bad is the higher labor cost will be passed on. But I expect the Tariff deals will be worked out as Canada and Mexico need us more than we need them. This is just how deals are made and generally the other play flinches first.