GM Tops Estimates Despite US$1.1 Billion Tariff Hit

General Motors reported a US$1.1 billion impact from auto tariffs in 2Q25 as the company continues adjusting operations and revising forecasts in response to trade policies enacted under President Donald Trump. Despite the tariffs, GM’s adjusted earnings of US$2.53 per share exceeded analyst expectations of US$2.44, while revenue reached US$47.12 billion—slightly above the projected US$46.28 billion.

The automaker reaffirmed its full-year guidance, which had been lowered in May to reflect a potential US$4 billion to US$5 billion total tariff impact. CFO Paul Jacobson confirmed on the July 22 earnings call that the full-year outlook remains unchanged and noted that US$2 billion of the expected impact is attributed to GM’s South Korean operations. “We are positioning the business for a profitable, long-term future as we adapt to new trade and tax policies,” CEO Mary Barra wrote in a letter to shareholders. She added that the company is working to “greatly reduce our tariff exposure.”

The Trump administration’s 25% tariffs on imported vehicles and parts remain in effect. While some tariff reimbursements on US-made components and adjustments to cumulative tariffs have been introduced, GM’s results reflect escalating pressure on the auto sector. The company has already  implemented measures to offset roughly 30% of the cost increases, including shifting production, managing supply chains, and strategic pricing decisions.

GM’s second-quarter net income attributable to shareholders fell 35.4% year over year to US$1.9 billion, and adjusted EBIT dropped 31.6% to US$3.04 billion. North America’s adjusted EBIT margin declined to 6.1%, down from 10.9% a year earlier. Vehicle sales reached 974,000, missing the 1 million forecast, while EV sales totaled 46,300 units. GM now holds the No. 2 position in the US EV market.

The company’s revised 2025 guidance includes adjusted EBIT between US$10 billion and US$12.5 billion, down from January’s US$13.7 billion to US$15.7 billion projection. Expected net income for the year stands between US$8.25 billion and US$10 billion, while adjusted automotive free cash flow is estimated at US$7.5 billion to US$10 billion.

GM is also reshaping its manufacturing footprint. In June, the company announced US$4 billion in US plant investments, including shifting production of vehicles currently made in Mexico to domestic facilities. In July, GM confirmed it will move production of a gas-powered SUV and expand pickup truck manufacturing in Michigan.

In response to Trump’s tax and spending legislation signed July 4, which ends EV tax credits after Sep. 30, GM expects a short-term surge in EV purchases followed by reduced demand. “We anticipate headwinds to EV profitability from lower volume due to the recent removal of government incentives,” Jacobson told analysts. However, he added that GM expects a minimal impact on 2025 results.

Other automakers have reported high tariff impacts.Stellantis reported a preliminary net loss of €2.3 billion (US$2.7 billion) for the first half of 2025, attributing part of the decline to the impact of US tariffs on vehicles and auto parts. The company, which owns brands such as Jeep, Ram, Peugeot, and Fiat, said it had already incurred €300 million in tariff-related costs during the first half, with expectations for that figure to at least double in the second half. 

In an April analysis, the Center for Automotive Research (CAR Group) emphasized the complexity of estimating tariff impacts on US-produced vehicles. “Estimating tariff impacts on domestically produced vehicles is not a straightforward endeavor,” the organization stated. According to data from the American Automobile Labeling Act (AALA), no vehicle manufactured in the US contains 100% domestic content—foreign parts make up between 20% and 91% of total content. 

According to estimates compiled by CAR, the US auto industry is projected to face a total cost increase of US$107.7 billion in 2025 due to a 25% tariff on imported auto parts and vehicles, regardless of country of origin. For US-produced vehicles, which are expected to total 10.2 million units, the average tariff cost per vehicle is estimated at US$4,239, resulting in a US$43.0 billion increase in production costs. 

For imported light vehicles, including those from Canada and Mexico, the expected sales volume of 7.5 million units would incur an average cost of US$8,722 per vehicle, adding US$64.7 billion in additional costs. Within this total, the Detroit 3 automakers—Ford, General Motors, and Stellantis—are estimated to face a combined US$41.7 billion in tariff-related costs.