General Motors reports a 35% profit drop as tariffs weigh on car industry

General Motors, a car company, reported a 35 percent decline in second-quarter profits, including a $1.1 billion decline as a result of US tariffs, but it also confirmed its full-year forecast.

Although GM’s results on Tuesday still exceeded analyst expectations, the US automaker expressed concern that profits will be lower than they were in the first half of 2025.

The business noted the company’s focus on North American sales growth, which included strong pricing for new and updated trucks and sport utility vehicles. Among the automakers, GM was one of those who saw a rise in consumer demand for cars this spring in opposition to US tariffs and their higher prices.

Overall, revenues decreased by 1.8 percent to $ 47.1 billion, while profits overall decreased by 35.4 percent to $ 1.9 billion, year over year.

Early in April, the US imposed 25% tariffs on imported finished cars, which had an impact on major GM manufacturing plants in Mexico, Canada, and South Korea. Additionally, imported steel, aluminum, and auto parts have been subject to tariffs by automakers.

According to GM, the second quarter’s tariff hit showed “minimal mitigation offsets,” according to a slide presentation.

The Detroit-based company’s outlook for a weaker second half of 2025 is influenced by “seasonally lower” volumes, increased spending on vehicle launches, and the presence of two quarters with tariff hits in comparison to just one in the first half of the year.

After generating $6.5 billion in the first half of the year, GM anticipated annual operating income of $ 10 billion to $ 12.0 billion.

According to CNBC, CFO Paul Jacobson referred to the first quarter’s decline as “the peak of the tariff impact for us,” adding that mitigation efforts should result in a partial recovery in profit margins in the coming year.

manufacturing processes are shifting

According to a slide, GM said it would use “manufacturing adjustments, targeted cost initiatives, and consistent pricing” to at least at 30% of the tariff hit.

According to Jacobson, adjusting GM’s manufacturing footprint would take 18 to 24 months to complete.

Making use of unused capacity in its home market as President Donald Trump’s tariffs impose a fine on imported finished goods, GM announced in June that it would spend $4 billion over the course of two years to expand production in plants in Michigan, Kansas, and Tennessee.

The US production of the Chevrolet Equinox and Chevrolet Blazer was a part of the June announcement. In Mexico, the two vehicles are currently being assembled.

Manufacturing for the Chevrolet Trax, a well-known compact SUV that is reasonably priced, has not yet been moved from South Korea to its current home country.

Jacobson claimed on CNBC that the Trax remained profitable despite the importation’s impact.

There is a lot of uncertainty surrounding Korea, Jacobson said, “but we haven’t made any long-term decisions about it yet.”

Trump has set a deadline of August 1 for broad trade agreements with numerous nations, including South Korea, which is subject to a 25% tariff if no deal is reached.

“We’re optimistic that the US and Korea can come to a common ground,” Jacobson said. “We are aware that both sides’ positions are important to the auto industry,” he said.

The disappointing earnings report caused GM’s stock to decline. It is down 6.6 percent for the day as of 11: 30am in New York (15: 30 GMT).

The GM’s most recent hit comes one day after Stellantis announced it anticipated a $2.7 billion loss in the first six months of the year as a result of Trump’s tariffs. On July 29th, Stellantis, the maker of Fiat and Jeep, will release its year-end results.