General Motors is facing one of its toughest quarters in recent times, as trade tensions take a direct toll on its global operations. The company reported a 35.4 per cent drop in second-quarter profit, with a USD 1.1 billion dent attributed to new US tariffs on imported vehicles and raw materials.
The automaker earned USD 1.9 billion in Q2, down from the previous year, while revenue slipped to USD 47.1 billion. And while the results edged past analyst expectations, GM issued a clear warning that the second half of 2025 won’t be easy.
Two full quarters of tariff pressure, higher costs for vehicle launches, and slower seasonal demand are expected to weigh heavily on performance.
The pressure on GM is most evident in its aluminium-intensive supply chain. Aluminium is a critical material in GM’s modern vehicle designs, used extensively in body panels, structural frames, engine blocks, and battery casings, especially in electric models like the Chevrolet Bolt EV, Cadillac Lyriq, and GMC Hummer EV.
But starting April 2025, aluminium imports were hit with tariffs of up to 50 per cent, while a 25 per cent duty was also placed on finished vehicles built outside the US. That’s a problem for GM, which still manufactures key models in Mexico, Canada, and South Korea. With few immediate ways to offset these rising costs, profit margins in North America fell to just 6.6 per cent.
To regain control, GM is making a big move back home. In June, it announced a USD 4 billion investment to expand production at its US plants in Michigan, Kansas, and Tennessee. The goal is to shift manufacturing of models like the Chevrolet Equinox and Blazer from Mexico to the US in hopes of reducing tariff exposure and strengthening supply chain resilience.
But this reshuffle won’t happen overnight. The company expects it will take 18 to 24 months to fully implement the changes. Until then, GM will continue to feel the cost pressure. CFO Paul Jacobson said the company is working to offset around 30 per cent of the tariff hit through pricing adjustments and internal efficiencies but acknowledged that the next few quarters will remain challenging.
Despite the headwinds, GM is sticking to its full-year operating income forecast of USD 10–12.5 billion, after generating USD 6.5 billion in the first half of the year. However, investors remain cautious, with GM’s share price falling 6.6 per cent after the results were announced.
Meanwhile, there’s uncertainty abroad as well. GM’s popular Chevrolet Trax, built in South Korea, could soon face a fresh wave of tariffs if a new trade deal isn’t struck by the August 1 deadline. Another 25 per cent duty would complicate matters further, though GM says the Trax remains profitable for now. Still, any long-term decisions about Korean manufacturing will likely depend on how talks unfold.
GM isn’t alone in facing these pressures. Just a day earlier, Stellantis, maker of Jeep and Fiat announced it expects a USD 2.7 billion loss for the first half of the year, also due to tariff impacts.
As trade tensions reshape the auto landscape, GM’s pivot to local production may be its best hope for regaining control and resilience.
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