The next quarter will be worse says CEO Mary Barra.
 

GM Profit Shrinks, CEO Issues Warning

The Wall Street Journal reports GM Profit Shrinks After $1.1 Billion Tariff Hit

General Motors GM managed to beat analyst expectations Tuesday when it reported second-quarter results, but new tariffs on imported cars and auto parts took a $1.1 billion bite out of its bottom line.

GM’s net income shrank 35% in the second quarter despite strong sales gains at dealerships as President Trump’s automotive tariffs weighed on the largest automaker in the U.S. The company this spring lowered its earlier profit guidance for 2025. Now GM says greater impacts are expected to hit the carmaker in the third quarter, though the company maintained its profit guidance for the full year.

GM has largely held prices steady despite tariffs, choosing to absorb the costs while shifting some production to the U.S. and holding out for trade deals with Mexico, Canada and South Korea that would provide relief. Chief Executive Mary Barra hasn’t ruled out raising prices, however, saying the company will stay competitive.

“We’ve got a longer term plan to be able to mitigate a substantial part of this,” GM Chief Financial Officer Paul Jacobson told investors and analysts Tuesday, referring to tariffs. “We’re obviously looking for things to normalize around these trade deals that will get done, and we expect that will happen.”

In a letter to shareholders, Barra said GM is “positioning the business for a profitable, long-term future as we adapt to new trade and tax policies, and a rapidly evolving tech landscape.”

Tariffs hit GM’s operating income by $1.1 billion in the second quarter. The company’s net income of $1.8 billion was down from $2.9 billion in the second quarter of 2024. GM said few of its tariff “mitigation” efforts, such as making more vehicles at its U.S. factories, were fully implemented.

GM earlier this year said tariffs would add costs of $4 billion to $5 billion—about a third of its pretax profit last year—and that it aims to offset 30% of the tariff bill through actions like adjusting its manufacturing footprint.

Trump in April imposed 25% tariffs on imported vehicles and on automotive parts, though he later softened the blow by exempting most parts from Canada and Mexico and allowing automakers to pay tariffs only on the non-U.S. content in their vehicles assembled in Canada and in Mexico.

GM imports roughly half the vehicles it sells in the U.S., including entry-level Chevrolets and Buicks manufactured in South Korea that have sticker prices under $30,000, as well as full-size trucks and electric vehicles made in Mexico and Canada.

The small SUVs it produces in South Korea, such as the Chevy Trax, still cover their costs of production even with tariffs, GM has said.

Tariff Mitigation Efforts

First and foremost GM is eating the costs.

Trumponomics idiots believe Mexico and Canada will pay the costs.

In general, consumers pay the tariffs or importers pay the tariffs. Toyota is a rare instance where the exporter will eat some of the costs.

As part of its mitigation plans, GM will bring more production back to the US.

What CEO Mary Barra did not say is that the move will add to costs. If it didn’t, GM would not have operations in Mexico and Canada in the first place.

The tariffs are now so onerous that it makes sense to bring production back to the US.

But the bottom line has not changed, GM will have to raise prices or deal with perpetually lower profit, or some combination.

In addition, GM will face higher prices for steel, aluminum, and copper no matter where it produces cars.

Yes, it’s idiotic.

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