General Motors reported a huge profit drop in profits suffered $1.1 billion in new import tariffs proposed under President Trump’s escalating trade war.
The U.S. automaker said its core profit fell 32% to $3 billion in the second quarter, warning that the financial impact in the third quarter would worsen.
The Detroit-based company remains the largest automaker in the U.S., attributed to new responsibilities for vehicles made in Canada, Mexico and South Korea, a key part of its global production network. Revenue fell nearly 2% year-on-year to $47 billion.
CEO Mary Barra said in a letter to shareholders that GM is taking positive actions to mitigate the impact of tariffs, including $4 billion in new investments at U.S. parliamentary factories to reduce reliance on imports. The company expects that the U.S. will build more than 2 million cars in the U.S. every year as domestic production expands.
“We are working to significantly reduce tariff exposure,” Barra wrote. “Despite recent pressure, we remain focused on a profitable, flexible future.”
Chief Financial Officer Paul Jacobson said the company still expects trade-related costs to reach $5 billion, although GM aims to offset at least 30% of costs through a manufacturing shift, targeted cost savings and pricing strategies.
GM’s stock fell sharply, down 6.9% in early New York trading to $49.52.
The results for the second quarter were also affected by higher warranty fees, which GM said was partly related to software issues affecting early batches of electric vehicles. The company reported 46,300 ev sales in the second quarter, up from 31,900 in the first quarter, but admitted that EV sales growth was slowing across the U.S.
Under the rules of the Lower Inflation Act, the $7,500 federal electric vehicle tax credit that ends in September is about to expire, a rate of growth that complicated the growth rate.
Despite these challenges, Barra reiterated GM’s long-term commitment to electric vehicles.
“Even if EV growth is modest, we remain focused on a profitable power future,” she said. “Our Polaris continues to be a long-term EV leader supported by our domestic battery strategy and more adaptable manufacturing bases.”
GM’s warnings on deepening tariff costs highlight the pressures U.S. manufacturers face in an increasing protectionist trade environment. Trump’s return to the White House has prompted many companies to shift supply chains and expand domestic production to cope with their administration’s aggressive tariff strategies.
Although GM said that confidence that this economic burden would be eased with the emergence of a new bilateral trade agreement, the short-term impact clearly shocked investors, which brought new attention to the long-term costs of driving geopolitical-driven industrial policies.
