General Motors has become the second major automaker this week, following Stellantis, to reveal the financial strain caused by former President Trump’s trade policies. On Tuesday, G.M. reported that its second-quarter profit plunged by over 33% as tariffs imposed under the Trump administration cost the company more than $1 billion.
Earlier, Stellantis, the parent company of Chrysler, Jeep, and Ram, announced on Monday that it suffered a €2.3 billion ($2.7 billion) loss during the first half of the year, attributing part of the hit to tariffs and other Republican-led policies.
The U.S. auto sector, which employs roughly one million manufacturing workers, plays a critical role in the nation’s economy. Shrinking profits across the industry could limit automakers’ ability to invest in innovative technologies needed to remain competitive, especially as Chinese carmakers continue to grow their global presence.
G.M. disclosed that its quarterly profit dropped to $1.9 billion, down from $2.9 billion in the same period last year. Revenue also slipped by 2%, falling to $47 billion. The company manufactures vehicles in countries like Canada, Mexico, and South Korea, which are then exported to the U.S., making them subject to tariffs as high as 25%. G.M. estimates that tariffs could cost as much as $5 billion this year, though it hopes to offset about a third of that by cutting expenses and shifting some production to the United States.
In a letter to shareholders, CEO Mary Barra emphasized that G.M. is investing $4 billion to expand domestic production of pickups and SUVs—vehicles that are less affected by tariffs.
“We’re preparing the company for a strong, long-term future as we navigate changes in trade and tax policies, along with rapid technological advancements,” Barra wrote.
G.M. reported that its electric vehicle (EV) sales more than doubled, driven by new models such as the battery-powered Chevrolet Equinox SUV, which starts at around $35,000. The automaker now holds 16% of the U.S. EV market, ranking second behind Tesla.
At the same time, G.M. is capitalizing on Republican efforts to weaken environmental regulations by announcing a $900 million investment in a new V-8 engine to be built in Tonawanda, New York. The gasoline engine will power large pickups and SUVs. “Even as EV growth slows, we remain confident in the long-term profitability of electric vehicles,” Barra said, adding that traditional combustion engines will still play a key role in the near term.
In a positive development, G.M. saw its China sales rise to $6.1 billion in the quarter, up from $4.7 billion a year earlier. Western automakers have struggled to keep up with domestic Chinese brands like BYD, which are producing affordable, high-quality vehicles and leading in EV technology.
Through its partnership with SAIC Motor, G.M. sells Cadillac, Buick, and Chevrolet vehicles in China. Half of the cars sold by this joint venture during the quarter were EVs or hybrids.
Following the release of its earnings report, G.M. shares dropped about 7% in Tuesday morning trading.
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