General Motors has reported a 32% drop in second-quarter core profit to $3bn, blaming Donald Trump's tariffs for knocking $1.1bn off its operating income. The US automaker warned that the impact is expected to worsen in the third quarter, as it stuck to a previous estimate that trade headwinds could cost it between $4bn and $5bn.
Revenue for the quarter ending 30 June fell nearly 2% to about $47bn from a year earlier, while shares dropped about 3% in premarket trade. GM, the largest US automaker by market share, employs roughly 162,000 people globally and supports nearly 1 million US jobs in the automotive manufacturing industry.
Chief executive Mary Barra told shareholders that GM is “positioning the business for a profitable, long-term future as we adapt to new trade and tax policies”. The company has lowered its annual adjusted core profit forecast to between $10bn and $12.5bn, citing tariff impacts. Trump imposed 25% tariffs on foreign-made vehicles and car parts in April, pushing the average US tariff rate to 18.7%, the highest since 1933.
In response, GM announced plans to invest $4bn over two years into three US plants in Michigan, Kansas and Tennessee, following an $888m investment in a New York plant for next-generation V-8 engines. Barra said these investments will “greatly reduce our tariff exposure” with new capacity coming online in 18 months. However, a Brookings Institution report in May noted that the overall impact of tariffs on US auto manufacturing “is unclear, with potential to be net negative”.
Despite the tariff headwinds, GM’s underlying business remained solid. US sales rose 7%, with strong pricing on pickup trucks and SUVs, and the company returned to a small profit in China after a loss a year earlier. Rival Stellantis warned that tariffs would significantly affect its second-half results, costing it about $350m.
US inflation rose to 2.7% in June 2025 from 2.4% in May, as companies raised prices in response to the tariff regime.
