GM Profit Falls 35 Percent in Second Quarter as $1.1 Billion Tariff Hit Weighs on Results

The company’s CEO touts future resilience as GM invests $4 billion in U.S. production to reduce tariff exposure and boost capacity.

The GM logo on the facade of the General Motors headquarters in Detroit, Mich. Reuters/Rebecca Cook/File Photo

General Motors Co. reported a 35 percent drop in second-quarter profit Tuesday as a $1.1 billion tariff hit weighed on earnings—but the company still exceeded Wall Street expectations and reaffirmed its full-year financial forecast.

The Detroit-based automaker said on July 22 that net income fell to $1.9 billion, or $1.91 per diluted share, down from $2.9 billion, or $2.55 per share, a year earlier. Adjusted earnings came in at $2.53 per share, ahead of the $2.34 average analyst estimate, but below the $3.06 reported in the same quarter of 2024. Revenue declined slightly to $47.1 billion from $48 billion.

The earnings release marks GM’s latest effort to reassure investors amid major changes related to the Trump administration’s tariff-driven global trade reset and a cooling electric vehicle (EV) market. CEO Mary Barra, in a letter to shareholders, acknowledged the headwinds while highlighting the company’s forward strategy—including the expectation that EV demand will eventually rebound.

“In addition to our strong underlying operating performance, we are positioning the business for a profitable, long-term future as we adapt to new trade and tax policies, and a rapidly evolving tech landscape,” Barra wrote. “Despite slower EV industry growth, we believe the long-term future is profitable electric vehicle production, and this continues to be our north star.”

Tariffs imposed under the Trump administration contributed to a $1.1 billion net cost for GM in the second quarter alone, according to an earnings deck. The company warned that the hit would grow in the third quarter due to the timing of indirect tariff-related costs. GM now expects a total gross tariff impact of $4 billion to $5 billion in 2025, though it aims to offset at least 30 percent of that through cost initiatives, supply-chain changes, and pricing adjustments.

To mitigate future exposure, GM in June announced $4 billion in new investment across U.S. assembly plants to add 300,000 units of annual capacity for high-margin light trucks, SUVs, and crossovers. Barra said that once the added capacity comes online in about 18 months, GM projects building more than 2 million vehicles per year in the United States.

“This will help us satisfy unmet customer demand, greatly reduce our tariff exposure, and capture upside opportunities as we launch new models,” she wrote in the letter to shareholders.

Despite industry-wide signs of slowing EV adoption, GM’s EV sales more than doubled year over year in the second quarter, climbing 111 percent, as the company captured 16 percent of the U.S. EV market.

Barra noted that even though GM expects profitable EV production, it also keeps investing in its traditional lineup of internal combustion engine (ICE) vehicles.

“Overall, GM is well positioned to succeed in an ICE market that now has a longer runway,” she wrote. “I believe everything we’re doing strategically and proactively, along with closer alignment of emissions rules with consumer demand, will further differentiate us from our competitors, increase our resilience, and help us emerge from this transition period even stronger and more profitable than before.”

The automaker maintained its full-year guidance of $10 billion to $12.5 billion in adjusted earnings before interest and taxes (EBIT) and adjusted earnings per share of $8.25 to $10. It also kept capital expenditure plans unchanged at $10 billion to $11 billion.

Wedbush analyst Dan Ives said GM’s leadership is proving adept at steering through a challenging operating environment.

“While the tariff headlines continue to put further pressure on the bottom line for the foreseeable future, we believe Barra & Co. continues to impressively navigate the complex backdrop,” he wrote in a note to clients.