Tariffs Take Toll as G.M. Profits Drop 34.5% in Q2

General Motors saw its second-quarter earnings drop by 34.5%, with profits decreasing to $1.9 billion from $2.9 billion in the same period last year. The drop came as U.S. tariffs—particularly those on imports from Canada, Mexico, and South Korea—added over $1 billion in costs, with a projected annual impact reaching $5 billion.

The automaker’s quarterly revenue dipped by 2% to $47 billion, reflecting the broader strain on the industry. Stellantis reported a €2.3 billion ($2.7 billion) loss for the first half of the year earlier this week, also citing recent Republican-led trade and policy changes as key factors behind the financial setback.

To offset rising tariff costs, G.M. is cutting expenses and shifting parts of its production back to the U.S., with the goal of mitigating about one-third of the yearly financial hit. A $4 billion investment has been allocated to boost domestic manufacturing of pickup trucks and SUVs, which are less exposed to tariffs.

Electric vehicle sales provided a bright spot for the company, more than doubling thanks to the introduction of new models like the electric Chevrolet Equinox. G.M. now holds 16% of the U.S. EV market—second only to Tesla.

Still, the company is not turning its back on traditional gas-powered vehicles. Taking advantage of loosened environmental regulations, G.M. plans to invest $900 million in a new V-8 engine production facility in Tonawanda, New York. These engines will support its larger pickup and SUV lineup.

Internationally, G.M. posted a strong performance in China, with sales increasing to $6.1 billion from $4.7 billion during the same period last year. The company markets Cadillac, Buick, and Chevrolet vehicles in the region through its partnership with SAIC Motor. Half of the vehicles sold through the venture were electric or hybrid.

Despite growth in China and momentum in EV sales, investor concerns were evident, as G.M. shares fell roughly 7% Tuesday morning. As profitability tightens and global competition intensifies—particularly from rapidly expanding Chinese manufacturers—G.M.’s efforts to balance near-term resilience with long-term innovation will remain in sharp focus.