GM expects a $500 million tariff refund—just a fraction of the $3.1 billion it paid last year

There’s a $500 million windfall General Motors is expecting to help boost its first quarter earnings. The catch? It’s a refund for tariff payments it made to the Trump administration—and it doesn’t come anywhere close to the billions it still has to pay.

When the Supreme Court in February struck down tariffs the Trump administration imposed last year by citing the International Emergency Economic Powers Act—which gives the president broad economic powers after declaring a national emergency—it didn’t tell the White House how it should go about issuing refunds. The court’s ruling invalidated several key tariffs President Donald Trump had imposed since he retook office last year including the “reciprocal tariffs” imposed on many countries during the president’s  “Liberation Day” event more than a year ago. 

In total, $166 billion in payments are eligible for refunds. 

GM said Tuesday it will receive half a billion of those eligible payments as part of its tariff refund—merely a fraction of what it had paid overall. Last year, the company reported $3.1 billion in tariff-related costs.

Because of the Supreme Court ruling, GM said Tuesday it expected to pay import duties between $2.5 billion and $3.5 billion for the coming year, down from the $3 billion to $4 billion it previously expected to pay. 

GM’s chief financial officer Paul Jacobson said on GM’s first quarter earnings call Tuesday that the refund the company is set to receive is small compared to the other tariffs that apply to it, including those imposed by the Trump administration that haven’t been invalidated by the nation’s top court. These include tariffs on imported steel and aluminum as well as cars and car parts. These tariffs rely on section 232 of the Trade Expansion Act of 1962 and were not affected by the Supreme Court ruling. 

“Keep in mind most of our tariff burden comes from 232. So IEEPA versus our size is relatively small,” he said.

Jacobson added that the company didn’t know when it would receive the funds. 

But that hasn’t stopped the automaker from adjusting its first quarter results to reflect the $500 million payment, according to a Tuesday shareholder letter signed by CEO Mary Barra.

By including the expected half-billion refund in it’s first quarter results, GM’s first quarter adjusted EBIT, earnings before interest and taxes, saw an increase of nearly 22% year over year, to $4.25 billion. Its EBIT adjusted margin increased to 10.1%, up from the 8.6% margin excluding the tariff refund. The company’s adjusted earnings per share came in at $3.70, well above Wall Street expectations of $2.62 and up from the $2.78 it reported in the same quarter last year. 

GM also increased its full year earnings per share guidance to between $11.50 and $13.50, up from the prior range of $11 to $13 thanks to the refund.

The expected tariff refund helped push the company’s stock up 6% in pre-market trading, before paring back gains. The stock was trading up 1% as of Tuesday afternoon. 

The Commerce Department earlier this month rolled out the first version of its electronic tariff refund system, the Consolidated Administration and Processing of Entries (CAPE), that allows companies which imported products subject to the struck-down tariffs to claim a refund. Of more than 330,000 importers eligible for refunds, 56,497 have filed for refunds, Fortune reported, citing a filing from U.S. Customs and Border Protection. While CBP said refunds should be paid out 60 to 90 days after an importer’s claim is processed, approximately one-third of claims filed by importers have already undergone a custom’s process dubbed liquidation, which occurs a year after the tariffs in question are paid, and is making it slower for the government to process them.

Still, following the Supreme Court ruling in February, the Trump administration has moved to keep many of its tariffs in place by changing its approach. Last month, the administration opened investigations into the trading practices of several countries, including China, Mexico, and the European Union, in its attempt to impose tariffs based on Section 301 of The Trade Act of 1974.

While the process takes longer and may be more difficult, experts have previously told Fortune, the administration may be able to impose its tariffs on trading partners in such a way that could survive legal scrutiny. 

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