General Motors is going through a costly new chapter shaped by old trade policies. The company reported a steep 35.4% decline in second-quarter profits, falling to $1.9 billion. A major reason for the drop is the Trump-era tariffs that added $1.1 billion in costs during the quarter alone. These tariffs, originally aimed at boosting domestic manufacturing, now risk eating into the auto giant’s financial stability.
Revenue dipped slightly by 1.8% to $47.1 billion. Yet GM still beat Wall Street expectations, helped by strong truck and SUV sales in North America. The company now braces for a deeper financial drag in the second half of 2025 as indirect costs tied to the same tariffs increase.
CEO Mary Barra emphasized a clear direction forward: shifting manufacturing closer to home. GM has committed $4 billion to expand production within the United States. The goal is to limit future tariff exposure while meeting high demand for trucks and new electric vehicles.
Even with trade pressures, GM’s earnings per share reached $2.53, topping analyst estimates. The automaker reaffirmed its full-year outlook, projecting an operating income of $10 billion to $12.5 billion. Having already posted $6.5 billion in the first half, the company believes it can stay on course.
The tariff storm hasn’t slowed EV progress. GM sold 46,300 electric vehicles in Q2, up from 31,900 the previous quarter. Barra called EVs the company’s "north star," reinforcing GM’s long-term push toward electric mobility. GM now holds 16% of the US EV market, second only to Tesla.
Still, the road ahead remains uncertain. The expiration of EV tax credits in September may curb future growth. Meanwhile, GM plans to offset about 30% of the full-year tariff burden, estimated between $4 billion and $5 billion, through cost reductions, pricing strategies, and US plant expansion.
Generally, we see investors embracing the mixed signals. Shares of GM are down 3.3% in pre-market trading despite the earnings release. The core business is still strong, but global trade tension continues to cast a bit of a shadow.
Barra's strategy leans heavily towards resilience. The $900 million investment in a new V-8 engine plant in New York shows GM’s dual commitment to both legacy vehicles and EVs. As automakers face growing competition from abroad, GM is working to strike a balance between risk and reinvention.
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