General Motors (GM) chair and CEO Mary Barra has made her case on tariffs to President Trump.

"We've done a lot of scenario planning and we know the levers that we can pull to minimize any impact. But having the opportunity to talk to the president, I really believe he wants a strong manufacturing sector because it's good for the economy," Barra told Yahoo Finance on Tuesday.

In its earnings release today, GM said it assumes a "stable" policy environment. Its full-year 2025 EPS guidance of $11 to $12 was ahead of consensus forecasts for $10.75 and doesn't assume any impact of additional tariffs.

Barra said, "Well, I think he [President Trump] very much understands exactly what the ramifications will be [of tariffs]. And I think they've been very clear that they want to make sure there's the right and balanced relationships with many of the different countries that they're talking about to accomplish the goals of his administration. So I do think he has a very good understanding of the implications of tariffs or changing IRA [Inflation Reduction Act] or the stringency from a [emissions] standards perspective."

Read more: What are tariffs, and how do they affect you?

Tariffs hang over auto sector stocks like a rain cloud for good reason.

The auto industry is responsible for 26% of imports from Mexico to the US and 12% from Canada, UBS researchers estimated.

GM produces highly profitable pickup trucks in Mexico and relies on the country to make EVs such as the Chevy Blazer and Cadillac Optiq. It has five large assembly plants in the two countries.

As for rival Ford (F), it manufactures 12% of its products in Canada and Mexico.

"There's a question of how fast you can react to that [tariff]. You don't have a lot of extra capacity in the US to move," Bank of America auto analyst John Murphy said on Yahoo Finance's Opening Bid podcast.

The other component is whether demand takes a hit should automakers hike prices to offset tariffs.

Kelley Blue Book estimates the average cost of a car would increase by $3,000 should Trump push through 25% tariffs on Mexico and Canada. That could send people buying cheaper used cars.

Auto investors have taken a wait-and-see approach.

Shares of GM are down 8% since Nov. 25 as Trump ratcheted up his views on tariffs. Ford's stock is off by 8.7%. Tesla's (TSLA) stock is up 20% as CEO Elon Musk cozied up to Trump and began leading his government cost-cutting efforts.

—

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.