Dive Brief:
- General Motors is raising its full-year 2026 guidance on the expectation of approximately $500 million in tariff-related refunds, the company said Tuesday in its first-quarter earnings report. The half-billion “favorable adjustment” in potential tariff repayment by the automaker follows the U.S. Supreme Court’s February ruling that tariffs imposed by President Donald Trump under the International Emergency Economic Powers Act are unconstitutional.
- For the full year, the Detroit-based automaker now expects EBIT-adjusted earnings in a range between $13.5 billion to $15.5 billion, compared to its previously issued range of $13 billion to $15 billion, according to its earnings release for the quarter ended March 31.
- The company has not changed its free cash flow guidance in response to the tariff adjustment, as “we don't know…when the refunds are going to be received, how that window might work going forward,” GM CFO Paul Jacobson said Tuesday in response to an analyst question. “All we've done here is taken the IEEPA direct tariff that we paid last year that was subject to the Supreme Court decision and credited that back as a receivable,” he said.
Dive Insight:
The Supreme Court’s February ruling sent companies and their finance chiefs scrambling for clarity on the potential refund process, which could lead to an estimated $166 billion in collective repayments, CFO Dive previously reported.
The U.S. Customs and Border Protection agency launched a portal to help streamline submissions for “valid refund requests” at the start of April, noting that refunds will be issued between 60 and 90 days upon acceptance of certain documentation, according to its website.
Automakers have been among those hardest-hit by tariffs imposed by the Trump administration, navigating shifting tariffs on materials such as steel and aluminum as well as imported auto parts. Fellow automaker Ford, for instance, recorded a $900 million hit related to tariffs in its final quarter last year based on a policy shift, bumping its total tariff costs to $2 billion for 2025, the Wall Street Journal previously reported.
While increasing its profit estimates for the full-year, GM also lowered its estimate for gross tariff costs, according to its earnings report. The company is anticipating such costs to be between $2.5 billion to $3.5 billion compared to its previous estimate of $3 billion to $4 billion.
The upbeat guidance comes as GM beat profit expectations for its first quarter, logging EBIT-adjusted earnings of $4.2 billion — a 22% jump year-over-year driven by a combination of lower losses connected to its electric vehicle segment, lower warranty expenses, and emissions-related regulatory savings, Jacobson said.
However, such tailwinds were “partially offset by a full quarter of tariffs,” Jacobson said, with GM incurring $200 million of incremental gross tariff costs for its Q1 compared to “minimal” tariff costs last year.
As the company marshals its plans for the remainder of the year, GM aims to stay “prudent” in the face of continued economic uncertainty, he said.
“We don't want to rush into a lot of things that are going to jeopardize or otherwise put at risk longer term strategic initiatives by overreacting to what's going around us,” Jacobson said of GM’s approach to guidance, in response to a question by another analyst.
Along with tariffs, GM is one of several automakers that’s adjusted its EV strategy, embarking on a “strategic realignment” of the segment last year in response to slumping EV demand and shifting EV taxation. The company logged a $1 billion charge related to that alignment shift in Q1, driven primarily by contract cancellations as well as supplier commercial claims, Jacobson said.
“Our focus remains on improving EV profitability and scaling our business as market adoption grows, albeit at a slower expected pace than we had previously seen,” he said.
