Trumps Tariff’s starting to hurt: Car maker loses $1.1 billion in profits in just three months

They expect the tariff’s to hit even harder in the coming months.

What is happening?

General Motors reported a 32% drop in its second-quarter core profit, landing at $3 billion.

Tariffs Cost GM $1.1 Billion

The automaker blamed $1.1 billion of the hit on tariffs, which it says significantly impacted earnings.

GM expects the strain from trade policies to intensify in the coming months.

Revenue Slides Despite Strong US Sales

Revenue dipped nearly 2% year-over-year to $47 billion for the quarter ending June 30.

While the slide wasn’t massive, it underscores the balancing act between strong domestic demand and global economic challenges.

Earnings Fall Short of Last Year, But Beat Expectations

Adjusted earnings per share dropped to $2.53 from $3.06 a year earlier. Still, GM beat analyst expectations, which had projected $2.44 per share, according to LSEG data.

Investors React Cautiously

Following the earnings announcement, GM shares fell around 3% in premarket trading.

The dip suggests investor concerns over the company’s outlook, especially in light of escalating trade pressures.

Tariff Headwinds Set to Strengthen

GM reaffirmed that trade tensions could dent annual profits by $4 billion to $5 billion and noted that third-quarter impacts will likely be more severe.

Hopes to Offset a Portion of Tariff Damage

In an effort to soften the blow, GM says it plans to mitigate at least 30% of the expected tariff-related losses.

Specific strategies weren’t detailed, but cost-cutting and supply chain adjustments are likely.

Revised Outlook Holds Steady

After initially pulling its full-year guidance due to uncertainty around tariffs, GM reinstated it at a reduced level.

The company continues to project adjusted core profit between $10 billion and $12.5 billion for 2025.

Strong US Sales Offer a Silver Lining

Despite global pressures, GM’s core US market remained a bright spot.

Sales rose 7% in the US, buoyed by strong demand for high-margin pickups and SUVs, which continue to command premium prices.

Return to Profit in China

Another positive development came from China, where GM swung back to a small profit after posting a loss there last year.