General Motors profits tumble by a third as Trump tariffs deliver $1.1bn blow

General Motors has reported a sharp fall in profits after taking a $1.1 billion hit from new import tariffs introduced under President Trump’s escalating trade war.

The US carmaker said its second-quarter core profit dropped by 32 per cent to $3 billion, and warned that the financial impact would worsen in the third quarter.

The Detroit-based company, which remains America’s largest carmaker by volume, attributed the drop to new duties on vehicles manufactured in Canada, Mexico, and South Korea—a key part of its global production network. Revenue also fell by nearly 2 per cent year-on-year to $47 billion.

In a letter to shareholders, Chief Executive Mary Barra said GM was taking aggressive action to mitigate the impact of the tariffs, including $4 billion of new investment in US assembly plants to reduce reliance on imports. The company expects to build more than 2 million vehicles annually in the US as it scales domestic production.

“We are working to greatly reduce our tariff exposure,” Barra wrote. “Despite the near-term pressure, we remain focused on a profitable, flexible future.”

Chief Financial Officer Paul Jacobson said the company still expects trade-related costs to reach as much as $5 billion, though GM aims to offset at least 30 per cent of that through a combination of manufacturing shifts, targeted cost savings, and pricing strategy.

Shares in General Motors fell sharply on the news, dropping 6.9 per cent to $49.52 in early trading in New York.

The second-quarter results were also impacted by higher warranty costs, which GM said were partly linked to software issues affecting early batches of electric vehicles. The company reported 46,300 EV sales in the second quarter, up from 31,900 in Q1, but acknowledged that EV sales growth is slowing across the US.

The pace of growth has been further complicated by the impending expiration of the $7,500 federal EV tax credit, set to end in September for many GM models under the rules of the Inflation Reduction Act.

Despite these challenges, Barra reiterated GM’s long-term commitment to electric vehicles.

“Even as EV growth moderates, we remain focused on a profitable electric future,” she said. “Our north star continues to be long-term EV leadership supported by our domestic battery strategy and a more adaptable manufacturing base.”

General Motors’ warning about deepening tariff costs underscores the pressure facing US manufacturers as they navigate an increasingly protectionist trade environment. Trump’s return to the White House has already prompted a number of companies to shift supply chains and expand domestic production in response to his administration’s aggressive tariff strategy.

While GM says it is confident the financial burden will ease as new bilateral trade agreements emerge, the short-term impact has clearly rattled investors—raising fresh concerns about the long-term cost of navigating geopolitically driven industrial policy.