General Motors (GM) is experiencing a significant drop in its stock price, primarily due to its extensive exposure to Mexico and reliance on imported vehicles and parts. On the last weekday of January, the trend continued as the automaker’s shares dropped more than 6% in mid-morning trading. This steep drop came after investor concerns that GM had not sufficiently mitigated the impact of the newly revealed tariffs in its earnings release. These tariffs, introduced by President Donald Trump, impose a 25% levy on “all cars that are not made in the United States” and some automobile parts.
GM’s production strategy heavily involves Mexico and South Korea, where the company manufactures key models such as the Equinox and Blazer. Notably, approximately 52% of GM vehicles sold in the U.S. during the first three quarters of 2024 were assembled domestically. About 30% of those vehicles were actually built in Canada and Mexico. Specifically, Mexico made up 16.2% of U.S. vehicle imports compared to sales for 2024, according to data collected by GlobalData.
The worry is heightened by the reality that 15% of GM’s U.S. vehicles come from South Korea. This much reliance on outside foreign production and component parts has been a red flag to investors – particularly during times of trade wars and tariff threats.
“Roughly half of GM’s US sales are produced in the US, but imported parts are a concern.” – Dan Levy
Taken together, this perfect storm has helped GM’s stock value drop 13% year-to-date. The automaker’s reliance on imported components and its global production network make it particularly vulnerable to trade policy changes, such as those initiated by the Trump administration.