General Motors (GM) Stock: Trump's Tariffs Slash $1.1 Billion from Second Quarter Profits

TLDR

Table of Contents

GM’s second-quarter core profit dropped 32% to $3 billion due to $1.1 billion tariff impact
Company expects tariff headwinds to worsen in Q3, anticipating $4-5 billion annual impact
Revenue fell 2% to $47 billion while adjusted earnings per share declined to $2.53 from $3.06
GM beat analyst expectations of $2.44 per share despite profit decline
Shares fell 3% in premarket trading following earnings announcement

General Motors delivered mixed second-quarter results Tuesday as Trump administration tariffs took a hefty $1.1 billion bite out of profits. The automaker’s core earnings tumbled 32% to $3 billion for the quarter ending June 30.

The Detroit giant saw adjusted earnings per share fall to $2.53 from $3.06 a year earlier. Despite the decline, GM managed to beat analyst expectations of $2.44 per share according to LSEG data.

Revenue dropped nearly 2% to $47 billion from $47.97 billion last year. The results still topped Wall Street’s estimate of $45.84 billion.

Investors weren’t impressed. GM shares declined more than 2.5% in premarket trading Tuesday morning.

The tariff pain isn’t over yet. GM warned that the impact will worsen in the third quarter due to indirect costs related to the trade policies.

The company maintained its previous estimate that tariffs could slam the bottom line by $4 billion to $5 billion for the full year. GM believes it can mitigate at least 30% of that impact through manufacturing adjustments and pricing strategies.

Underlying Business Shows Strength

Beyond the tariff troubles, GM’s core operations actually performed well. U.S. sales climbed 7% during the quarter, with the company maintaining strong pricing power on its profitable pickup trucks and SUVs.

The China business swung back to profitability after losing money there a year earlier. This turnaround provided some relief from the tariff headwinds hitting North American operations.

GM stuck to its full-year guidance despite the challenges. The company expects adjusted earnings before interest and taxes between $10 billion and $12.5 billion for 2025.

Investment Strategy Shift

CEO Mary Barra announced $4 billion in new U.S. facility investments across Michigan, Kansas, and Tennessee. The spending includes moving Cadillac Escalade production and boosting output of GM’s two main pickup truck models.

🚨BREAKING: General Motors to move $4 BILLION in production from Mexico to the United States. pic.twitter.com/Xj9YgM1IH6
— Benny Johnson (@bennyjohnson) June 11, 2025

This represents a clear pivot toward strengthening combustion-engine operations. The move raises questions about GM’s 2035 goal to end gas-powered vehicle production.

EV sales did show improvement with 46,300 units sold in Q2, up from 31,900 in the first quarter. However, the broader electric vehicle market growth has slowed considerably.

The $7,500 EV tax credit expires in September for many models. This policy change could further dampen electric vehicle demand across the industry.

Ford and Stellantis shares also dropped about 1% in premarket trading Tuesday. Stellantis warned Monday that tariffs would heavily impact second-half results after costing 300 million euros in the first half.

The Center for Automotive Research estimates uniform 25% tariffs would increase costs by $107.7 billion for all U.S. automakers. The Big Three Detroit automakers face an estimated $41.9 billion in additional costs.

President Trump signed executive orders in April to relax some 25% tariffs on automobiles and auto parts. The changes came as import taxes threatened to hurt domestic manufacturers’ competitiveness.

GM expects the tariff impact to reach its peak in the third quarter before potential mitigation efforts take effect.

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