As a result of the ongoing trade war and tariffs, major automobile manufacturer, General Motors (GM), took a significant hit on their net profit, according to second-quarter reports, due to tariff costs.
In the second quarter of 2025, GM reported a net tariff impact of $1.1 billion and estimated an annual impact of $4-5 billion due to new tariffs, according to GM. A report by the Wall Street Journal (WSJ) said the tariff impact resulted in a 35% decrease in GM’s net income.
GM, with a manufacturing facility in Concord, North Carolina, is one of the largest automobile manufacturers in the nation. GM manufactures vehicles for private and commercial use. GM Defense, a subsidiary of GM, also manufactures vehicles for the Department of Defense. GM Defense opened a production facility in Concord in 2021.
“The Trump administration implemented a 25% tariff on imported passenger vehicles, light trucks, and automobile parts,” Joseph Harris, fiscal policy analyst for the John Locke Foundation, told the Carolina Journal. “As a result, vehicle and parts imports to North Carolina declined from $3.1 billion to $2.6 billion through May compared to the same period last year.”
On June 11, the Trump administration doubled the tariffs on steel and aluminum imports, and recent data from the Economic Development Partnership of North Carolina shows a downturn in imports in the steel, aluminum, and automobile industries.
“The company’s net income of $1.8 billion was down from $2.9 billion in the second quarter of 2024,” reported WSJ. “GM said few of its tariff ‘mitigation’ efforts, such as making more vehicles at its US factories, were fully implemented.”
GM has also unveiled plans to bring some of its production to the US, including the transfer of gas-powered Chevrolet Blazer SUV manufacturing from a facility in Mexico to one in Spring Hill, Tennessee, according to WSJ.
“In addition to our strong underlying operating performance, we are positioning the business for a profitable, long-term future as we adapt to new trade and tax policies, and a rapidly evolving tech landscape,” reads a letter to shareholders.
During the June Deutsche Bank Global Auto Industry Conference, Paul Jacobson, GM’s chief financial officer, gave an update on GM’s mitigation strategy. He said he believes the company can offset the tariff impact by 30%, down from a previous estimate of 50% mitigation. He also predicted the tariff impact would be greater in the third quarter.
“I don’t think what the administration is doing (enacting tariffs) is trying to pick winners and losers, necessarily,” said Jacobson. “I think there’s a clear policy agenda.”
He also announced that GM plans to invest $4 billion in three manufacturing facilities over the next two years. This investment will add “300,000 units of capacity for high-margin light-duty pickups, full-size SUVs, and crossovers,” continues the letter. “This will help us satisfy unmet customer demand, greatly reduce our tariff exposure, and capture upside opportunities as we launch new models. The capacity begins coming online in just 18 months, after which we project building more than 2 million vehicles in the U.S. each year as we scale.”
GM executives believe that because of its implemented strategic and proactive moves, it will emerge from this “transition period” stronger, more resilient, and more profitable.
“Although GM is an American company, it outsources a significant portion of its vehicle production to countries such as China, Mexico, and Canada,” concluded Harris. “In fact, nearly half of the vehicles GM sells in the US are manufactured abroad. Consequently, these imports are subject to the new tariff, which has reduced GM’s profit margins on foreign-produced vehicles sold domestically.”
Despite their hopes to emerge stronger, GM predicts they will continue to see an increased hit to their net income due to the implemented tariffs.