GM profits hit by Trump's tariffs while EV sales more than double
General Motors
were weighed down by
US tariff
costs even as sales of its electric vehicles more than doubled and its Chinese business showed signs of a recovery.
GM reported adjusted earnings of $3 billion (€2.6 billion) before interest and tax in the second quarter, down 32 per cent year on year, while revenues fell 1.8 per cent to $47 billion. Adjusted operating profits were slightly higher than the average analyst estimate for $2.8 billion, according to S&P Capital IQ.
The US carmaker — which has previously warned of a tariff exposure of up to $5 billion — blamed the profit decline on costs related to US President Donald Trump's 25 per cent tariff on imports of foreign-made cars and other levies he has imposed. Shares were down 3 per cent in pre-market trading.
GM remains highly exposed to Trump's trade war, with a large manufacturing footprint in South Korea as well as Mexico and Canada for vehicles that are sold in the US.
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Tariffs imposed by the US are pressuring the global automotive sector with Stellantis warning of a net loss of €2.3 billion for the first half while Volvo Cars also reported its first operating loss since its 2021 listing.
For the April to June quarter, GM booked tariff costs of $1.1 billion although these are expected to decline as it takes measures to mitigate their impact.
GM has recently unveiled plans to invest $4 billion in US assembly plants to add 300,000 units of capacity, with production expected to start in 2027.
Some of its profit decline was offset by signs of a moderate recovery in GM's business in China, with net revenue rising 30 per cent to $6.1 billion during the second quarter.
Another bright spot was the strong growth of its battery-powered vehicles thanks to its strong product line-up. Sales jumped 111 per cent to 46,280 units despite a broader slowdown in EV growth as Trump ends policies that were favourable to sales of electric cars.
GM's share of the EV market in the US has reached 16 per cent as the company continues to invest heavily to establish cost-competitive battery supply chains sourced in North America.
'Despite slower EV industry growth, we believe the long-term future is profitable electric vehicle production, and this continues to be our north star,' chief executive Mary Barra said in a letter to shareholders.
The carmaker said it would maintain its guidance for annual adjusted operating profit of between $10 billion and $12.5 billion.
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