The trade policy implemented by United States President Donald Trump has begun to take its toll on the automotive industry. General Motors (GM), the largest U.S. automaker, reported a direct impact of $1.1 billion in losses in the second quarter of 2025 alone, attributable to the imposition of tariffs on imported vehicles. The company itself warned that the total effect of these measures could reach between $4 billion and $5 billion throughout the year.
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The company expects to mitigate at least 30% of this adverse effect through adjustments in manufacturing processes, cost-saving policies, and slight price increases in North America ranging between 0.5% and 1%.
How much did GM lose in profits due to Trump’s tariffs?
In the second quarter of 2025, GM’s profits plunged by 35.4% year-over-year, amounting to $1.895 billion, compared to over $2.9 billion reported in the same period of 2024. Revenue, although less affected, also declined by 1.8% to reach $47.122 billion.
The situation is even clearer when looking at the half-year performance: in the first half of the year, General Motors earned $4.68 billion, a 20.9% decrease compared to 2024, despite a slight revenue increase of just 0.2%, reaching $91.141 billion.
The company also reported that its adjusted earnings per share dropped from $3.06 to $2.53 compared to the same quarter last year, although it exceeded market expectations of $2.44 per share.
What strategies will GM implement to confront Trump’s tariff policy?
The management of GM faces a dilemma: reduce investments in future projects or reconfigure production to counteract the effects of Trump’s tariffs. Among the first actions already taken is an investment of $4 billion in three U.S. plants located in Michigan, Kansas, and Tennessee.
With this strategy, GM aims to strengthen its gasoline vehicle production, including moving the production of the Chevy Blazer—previously assembled in Mexico—to the Tennessee plant, in addition to increasing the manufacturing of large pickup trucks and SUVs like the Cadillac Escalade.
Furthermore, the automaker imports approximately half of the vehicles it sells in the U.S., mainly from Mexico and South Korea, making it particularly vulnerable to Trump’s protectionist policies. In contrast, competitor Ford assembles 80% of its vehicles within the U.S., providing it some protection against tariffs.
Why is GM doubling down on gasoline vehicles instead of electric ones?
The decision by General Motors to strengthen its gasoline car lineup responds to a global phenomenon: the slowdown in demand for electric vehicles (EVs). The company acknowledged that EV market growth has slowed, and the elimination of tax incentives is affecting sales.
In the words of Mary Barra, GM’s CEO: “Despite slower EV industry growth, we believe the long-term future is profitable electric vehicle production, and this continues to be our North Star.”
However, the immediate environment is not favorable. New fiscal and budgetary legislation passed in the U.S. eliminates the $7,500 tax credit for new EV purchases and the $4,000 credit for used EVs, effective September 2025. Additionally, reforms pushed by Trump have eliminated fines for non-compliance with fuel economy rules, further incentivizing the production of combustion engine models.
How did Trump’s tariffs affect other manufacturers like Stellantis and Ford?
GM is not the only auto giant affected. The French group Stellantis, which produces brands like Peugeot, Fiat, and Chrysler, reported a negative impact of €300 million from tariffs in the first half of 2025, with total losses of €2.3 billion. Meanwhile, shares of Ford and Stellantis on the U.S. stock market dropped about 1% following GM’s results and the escalation of trade tensions.
What are GM’s projections for the rest of 2025?
Despite this adverse outlook, General Motors maintains its forecast of adjusted annual earnings between $10 billion and $12.5 billion. However, the company warned that the third quarter could be the most challenging in terms of tariff impact.
