GM profit falls as Trump tariffs add $1.1 billion in costs

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General Motors Co.’s second-quarter profit fell as President Donald Trump’s tariffs chopped $1.1 billion from adjusted earnings.

The Detroit-based automaker said Tuesday it earned $2.53 per share on an adjusted basis, above the Bloomberg consensus forecast of $2.33 but short of the $3.06 it made a year ago. GM’s profits also suffered from higher warranty costs and a buildup in inventory of electric vehicles.

Net income declined 35% to $1.9 billion compared with $2.9 billion in the second quarter of last year.

Shares of the carmaker fell 3.5% in premarket trading to $51.35 as of 7:20 a.m. in New York. The stock closed Monday almost unchanged for the year.

GM’s results showcase the difficulty automakers face to maintain profits in an environment that newly penalizes globally integrated parts supply chains and cross-border vehicle sales. Chief Executive Mary Barra hinted at that challenge in a letter to shareholders describing the carmaker’s efforts to adjust to the new reality.

“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,” Barra said, noting an announcement in June to shift some production to the U.S. from Mexico.

The company managed to beat Wall Street expectations as GM grew its U.S. vehicles sales in the the quarter despite higher tariffs. It achieved a second straight quarterly profit in China, which improved by $175 million over a year ago and helped on the bottom line.

GM kept its current full-year forecast for earnings before interest and taxes in a range of $10 billion to $12.5 billion. The company had slashed its 2025 outlook in May, cutting it from initial projection in January for earning as much as $15.7 billion this year.

Some non-tariff costs also hurt GM in the quarter. The company announced a recall of 600,000 trucks due to an engine defect, which contributed to $300 million in costs in the quarter. GM also worked to build up its electric vehicle inventory, which added $600 million in costs. Weaker pricing on fleet sales weighed on profits to the tune of $200 million.

All told, earnings before interest and taxes in GM’s North America business fell $2 billion in the quarter compared with the same period a year ago. Revenue fell 1.8% to $47.1 billion, partly from weaker pricing.

The company indicated that year-on-year profit deceleration may not be as pronounced in the second half of the year. GM said it can offset one-third of its $4 billion to $5 billion in tariff exposure as more of its mitigation efforts begin to more fully take hold.