General Motors faces $1.1 billion loss from tariffs

In the United States, tariffs on imported cars and auto parts have significantly impacted General Motors, costing the company $1.1 billion in the second quarter of 2025. This financial setback has led to a 21% decline in net income and a decrease in profit margin from 9% to 6.1%. The company anticipates total tariff costs could range between $4 billion to $5 billion by the end of the year. Despite the challenges, GM maintains an adjusted operating income forecast of $10 billion to $12.5 billion for the year, down from $14.9 billion in 2024. General Motors, as the largest automaker in the nation, has been navigating the complexities brought about by ongoing tariff policies instituted by the Trump administration. These tariffs have disrupted the auto industry more profoundly than many other sectors due to their swift implementation. The company has been able to weather this financial storm so far by drawing on a backlog of vehicles produced or imported prior to the tariffs taking effect. The supply of these pre-tariff vehicles varies by model and manufacturer, yet GM remains committed to not significantly raising car prices to accommodate the added tariffs. While they have absorbed these added costs and avoided passing them to consumers, analysts have noted that this approach could impact profitability if it continues. GM's chief financial officer, Paul Jacobson, indicated that the company plans to offset at least 30% of the anticipated full-year tariff impact through various cost initiatives and adjustments in manufacturing practices. However, the unpredictable nature of U.S. tariff policies adds uncertainty to GM's operational strategy. Rival automaker Stellantis reported a comparable impact, incurring approximately $350 million in tariffs while facing a 10% drop in U.S. sales in the second quarter following production pauses linked to tariff costs. The industry at large shows signs of absorbing these tariff costs instead of transferring them to consumers, placing further pressure on automaker profit margins amidst an environment where the average cost of new vehicles approaches $49,000. Analysts advocate for more proactive strategies from companies like GM to mitigate these financial pressures effectively.