Tariffs Take $1-Billion Bite out of General Motors Earnings

Source Credit : Reuters

General Motors second-quarter earnings took a $1.1-billion hit from tariffs, but the automaker still beat analyst expectations for the period on Tuesday, supported by strong sales of its core gasoline trucks and SUVs.

The largest U.S. automaker by sales said it expects the tariff impact to worsen in the third quarter and stuck to a previous estimate that trade headwinds threaten to hit the bottom line by $4 billion to $5 billion this year. GM said it could take steps to mitigate at least 30% of that impact.

General Motors Stock Price

Shares of General Motors fell 8%.

The automaker's revenue in the quarter ended June 30 fell nearly 2% to about $47 billion from a year ago. Its quarterly adjusted earnings per share fell to $2.53 compared with $3.06 a year earlier. Analysts on average expected adjusted profit of $2.44 per share, according to data compiled by LSEG. Its adjusted earnings before interest and taxes fell 32% to $3 billion.

GM was among corporations that revised annual guidance due to the impact from U.S. President Donald Trump's tariffs, lowering it to an annual adjusted core profit of between $10 billion and $12.5 billion. The company on Tuesday stood by that forecast.

CFRA Research analyst Garrett Nelson wrote in a Tuesday morning note that one of the reasons shares dropped was because investors were disappointed the automaker did not raise guidance.

Beyond tariffs, GM’s underlying business in the quarter was solid. Sales in the U.S. market – its main source of profit – rose 7%, while the company continued to command strong pricing on its pickup trucks and SUVs. GM swung back to a small profit in China, after losing money there a year earlier.

Analysts said GM may need to cut investment in future projects or find other ways to trim spending to offset the effect of tariffs. The automaker is so far keeping pricing consistent and absorbing added tariff costs rather than passing them on to customers.

Jeep-maker Stellantis on Monday warned that tariffs would significantly affect results in the second half of 2025, and said tariffs cost it about 300 million euros in the first half of the year. Shares of Ford Motor fell about 1% on Tuesday, and U.S.-traded shares of Stellantis edged up less than 1%.