Tariff costs climb, but gas truck sales hold firm
General Motors posted second-quarter results that exceeded analyst expectations, even as it absorbed a $1.1 billion hit from tariffs. The company reported $2.53 in adjusted earnings per share, down from $3.06 a year earlier, yet above the $2.44 consensus forecast. Revenue declined nearly 2% year-over-year to $47 billion, while adjusted EBIT fell 32% to $3 billion.
Despite the headwinds, GM reaffirmed its annual guidance of $10 billion to $12.5 billion in adjusted core profit. Executives warned that the impact from U.S. tariffs, signed into law by President Donald Trump, will intensify in the third quarter. GM said it is working to mitigate at least 30% of the projected $4 billion to $5 billion blow to its bottom line.
Strong U.S. sales offset pressure from trade policy
GM’s U.S. operations remained a bright spot. Sales rose 7% during the quarter, driven by strong demand and pricing for gasoline-powered trucks and SUVs. The automaker also returned to profitability in China, reversing losses from the previous year. However, analysts warn that GM may be forced to trim future investments or cut costs elsewhere to manage the ongoing tariff burden.
The shift comes as EV growth slows. While GM has publicly committed to ending production of gas-powered vehicles by 2035, recent moves suggest a more cautious path. CEO Mary Barra reaffirmed long-term EV ambitions but acknowledged the need to balance current profitability. In June, GM announced $4 billion in investment at U.S. plants in Michigan, Kansas, and Tennessee, expanding capacity for its Cadillac Escalade and key pickup models.
Trade disruptions reshape industry strategies
GM imports roughly half the vehicles it sells in the U.S., largely from Mexico and South Korea. That exposure makes it especially vulnerable to tariffs, compared to rivals like Ford, which builds 80% of its U.S.-sold vehicles domestically. As a result, GM’s short-term strategy is increasingly focused on reinforcing its profitable internal-combustion lineup, particularly in light of upcoming changes to EV tax incentives.
New legislation will eliminate the $7,500 tax credit for new EVs and the $4,000 credit for used EVs at the end of September. In parallel, new budget rules will suspend penalties for failing to meet fuel economy targets, giving automakers greater flexibility to produce gas-powered models.
Competitors brace for similar tariff fallout
On Monday, Stellantis warned of a significant tariff impact in the second half of 2025 after taking a 300 million euro hit earlier this year. Ford Motor’s stock slipped 1% on the news, with its Q2 earnings expected next week. Across the industry, carmakers are rethinking their electric vehicle rollouts and redistributing capital toward their most resilient and profitable segments.
As trade tensions persist and policy support for EVs fades, the U.S. auto sector is entering a period of major realignment, and GM appears determined to maintain flexibility amid uncertainty.
