General Motors (NYSE: GM) spent the second quarter living proof that even the largest automakers can get sideswiped by international trade policy. The company reported a sharp 32 percent drop in quarterly profit, the kind of financial hit that gets everyone from the corner office to the assembly line talking about what comes next. The villain in this chapter is tariffs: those extra charges slapped on imports that have suddenly made GM’s life a lot more expensive.
Let us get into the numbers for a moment. GM’s net profit fell to $1.9 billion from $2.9 billion a year ago. This slip happened even as the company managed to generate $47.1 billion in revenue, which slightly edged past Wall Street’s expectations. The real headache was a $1.1 billion cost hit, all credited to tariffs imposed by the Trump administration. In fact, that is not a one-off issue, the company estimates tariffs could take a $4 billion to $5 billion bite out of annual profits in 2025.
Tariffs, in their blunt simplicity, have made it costlier for GM to bring components and finished vehicles into the United States from Canada, Mexico, South Korea, and other key manufacturing hubs. You might remember that a lot of what fills the lots at your local dealership, from Chevy Silverados to GMC Terrains, often starts life across a border. The new rules mean GM either pays extra or scrambles to rejig where and how it makes cars and trucks.
Instead of passing these new costs straight to customers, GM says it is absorbing the financial punch. That decision has squeezed profits, but the automaker has kept sticker prices in place, convinced that raising them would only chase buyers somewhere else. The company has started moving work into U.S. plants, notably increasing investment at assembly lines in Indiana and elsewhere. That includes a hefty $4 billion spending pledge targeted at ramping up domestic production, especially for higher-margin pickups and SUVs.
Tempered optimism remains as CEO Mary Barra affirms that GM is trying to “greatly reduce tariff exposure,” but the company also admits not all of its cost-saving measures have kicked in yet. Shifting operations to the U.S. helps, but it is no quick fix. The changes are expected to offset 30 percent of this year’s tariff costs, meaning the majority of the impact still lands on the company’s bottom line. Barra’s letter to shareholders did not sugarcoat the situation, pointing to “evolving trade and tax policies, and a rapidly changing tech landscape” as key headwinds.
Industry-wide, the sector is feeling similar pain. The combination of new tariffs and uncertain trade agreements has forced automakers to rethink production footprints and even employment strategies. In one striking example, GM recently cut 700 jobs at its Canadian Oshawa plant, blaming trade tension and softening demand. Moves like this have sparked debate among union leaders and politicians, who see both broader economic risk and the very real possibility of further layoffs if the climate does not improve.
Shareholders appear to be wrestling with these doubts as well. GM’s stock slid more than three percent after the results hit the wires, and is down more than 12 percent compared to rivals like Ford, which has managed exposure more conservatively.
Electric vehicle sales at GM are still ticking up, but not swiftly enough to counteract the weight of trade disputes. During the quarter, the company moved 46,300 new electric models off the lot, up from 31,900 in the first quarter, though growth here seems to be slowing as government tax credits expire and market saturation nears. The long-term vision remains pinned to electric and hybrid expansion, but nobody at GM is pretending that will patch up next quarter’s balance sheet.
If you are searching for a moral to GM’s recent struggles, it is this: global companies thrive or falter not just on what they can design or build, but on how well they ride out political swings. Right now, even Detroit titans are discovering that global supply chains and shifting policies can make that ride unexpectedly bumpy.
