GM Avoids Tariffs by Relocating Production from Mexico to the U.S.

General Motors Co. intends to allocate $4 billion towards its U.S. facilities within the upcoming two years as a reaction to President Donald Trump’s tariff policies. This shift will decrease manufacturing in Mexico and increase the production of several high-demand gasoline-driven models domestically.

This expenditure will enlarge factories in Michigan, Kansas, and Tennessee. These expansions will increase the yearly U.S. manufacturing capability by 300,000 vehicles, according to GM’s Chief Financial Officer Paul Jacobson during a Deutsche Bank conference held on Wednesday.

The assembly of multiple best-selling models, such as the lucrative Chevrolet Silverado and GMC Sierra pickup trucks along with the Chevrolet Equinox SUV, will shift from Mexican plants to facilities within the U.S. A company representative stated that General Motors intends to create an additional 3,000 to 4,000 American jobs once this production realignment is complete.

This change represents one of the most significant shifts so far by an automotive company in reaction to President Trump’s tariffs, which have drastically altered the economic landscape of car production. Additionally, it signifies CEO Mary Barra’s acknowledgment that the president’s trade conflict is not merely a temporary situation.

The investments will enable GM to manufacture over 2 million vehicles annually in the U.S. According to the source, although production of models mentioned in the announcement will persist in Mexico, they will be produced at reduced rates.

During an independent interview, Jacobson stated that the car manufacturer has so far managed to evade price hikes resulting from tariffs and aims to keep this stance.

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We don’t wish to increase prices due to tariffs and subsequently anticipate these prices will decrease once tariffs are reduced,” Jacobson stated. “Our aim is to maintain consistency for our customers.

Since Trump’s first term in office, he has
railed
Opposing businesses for producing automobiles solely in Mexico before importing them for sale in the U.S. General Motors was the top importer of completed vehicles into America last year and aims to reduce approximately $5 billion worth of potential impact from President Trump’s tariffs.

GM had earlier indicated that they anticipate covering approximately one-third of their tariff expenses. This new development will enable them to mitigate these costs further, according to a spokesperson.

As of 9:58 a.m. in New York, the automaker’s shares increased by 2.3%. The stock had dropped by 8.2% up until Tuesday’s closing, performing poorer compared to the S&P 500 Index which saw an increase of 2.7%.

For General Motors, this represents a shift from the company’s long-standing strategy to boost production in Mexico since the 1980s. This move was driven by the pursuit of cheaper labor costs and an alternative to rising expenses related to workers and retirees in the United States.

Barra has shifted focus towards establishing a positive rapport with Trump afterwards.
taking heat
Regarding the closure of a previous facility in Lordstown, Ohio, during his initial term as President, she collaborated with Trump on tariff policies. In fact, she supported these measures during an address at a Wall Street Journal event in late May, arguing that tariffs might assist GM in defending its market share against international car manufacturers.

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Following President Trump’s imposition of 25% tariffs on imported cars and components, Mary Barra met with him several times. She came to believe these duties on Mexican-produced automobiles would persist, according to sources close to the situation who wished to remain anonymous due to confidentiality reasons. As a result, General Motors officials started developing various strategies to cope with increased expenses for vehicles manufactured at affected facilities, as mentioned by one source.

Following the relocation, GM will construct pickup trucks across five plants, including three located within the U.S., along with one plant each situated in Canada and Mexico.

For years, the car manufacturer struggled to justify producing pickup trucks—their highest-earning model—using inexpensive labor from Mexico. They might find more justification for manufacturing the Equinox SUV, which begins at roughly $28,000 and carries smaller profit margins.

The announcement made on Tuesday grants GM’s facility in Lake Orion, Michigan, a fresh start. Originally, this plant was designated to produce the electric versions of the Silverado and Sierra pickup trucks, which are currently being assembled at another location in Detroit. This decision marks the second time the situation has changed for the plant.
delayed
Those plans because of slow electric vehicle truck sales.

Starting in early 2027, the facility will begin producing gas-powered versions of these trucks alongside larger SUV models like the Cadillac Escalade and Chevy Tahoe. This production will complement the work being done at a current manufacturing site in Texas which also produces these vehicles.

GM’s Fairfax assembly facility in Kansas City, Kansas, will begin production of the Equinox from mid-2027 onwards. This vehicle is presently manufactured in Mexico. Additionally, the plant will construct the new Chevy Bolt EV before the end of this year as well as various other budget-friendly electric vehicles powered by batteries for GM.
plans
To present at a later time.

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The facility in Tennessee, responsible for producing electric Cadillacs SUVs, will additionally manufacture the gas-driven Chevy Blazer SUV starting from 2027.

–Assisted by Matthew Miller.

(Updated with CFO statement in the sixth paragraph)