GM profits plunge amid Trump's duties. Will it manage to soften the blow in the third quarter?

American automaker General Motors (GM) reported a drop in profit in the second quarter by almost a third. According to the company's estimates, Donald Trump's duties cost it $1.1 billion. Despite this, GM managed to beat analysts' expectations for profits and revenue, as well as maintain the annual forecast. However, the automaker warned that pressure from trade barriers would intensify in the third quarter and noted that it was trying to offset some of its costs by restructuring production and raising prices.

GM's adjusted earnings before interest and taxes (Adjusted EBIT) for the second quarter decreased 32% year over year to $3 billion. The company explained the decline in profits by the impact of duties on imported cars and auto parts imposed by President Donald Trump. The company estimates they "ate" $1.1 billion from the bottom line.

Meanwhile, adjusted earnings came in above the $2.89 billion StreetAccount analysts had expected, wrote CNBC.

The largest U.S. automaker by sales confirmed that it expects the negative impact of duties to be even more severe in the third quarter and maintained its previous full-year forecast: trade barriers could reduce net income by $4-5 billion. In May, GM reduced its expected profit for the year to $10-12.5 billion compared with $15.7 billion expected in January, before the imposition of duties. The automaker said it is able to mitigate at least 30% of this effect. As part of that effort, GM plans to raise prices by 0.5-1% in North America, the company said in its materials for the report. 

General Motors shares fell 7.4 percent in trading on July 22.Shares of rival Ford and Jeep maker Stellantis fell nearly 1 percent and 0.2 percent, respectively, on Tuesday.

The day before, Jeep maker Stellantis warned that the U.S. duties would have a major impact on its financial performance in the second half of 2025, indicating that losses totaled about 300 million euros ($350 million) in the first half of the year. 

The company said it earned $2.53 per share (on an adjusted basis). By comparison, Bloomberg had forecast $2.33 per share, and LSEG, which is cited by CNBC, expected earnings per share of $2.44. On a year-ago second-quarter basis, GM earned $3.06 per share.  

In the second quarter of 2025, General Motors' revenue amounted to $47.12 billion - above the average forecast of analysts LSEG, expecting $46.28 billion. However, compared to last year, the figure decreased by almost 2%: in the second quarter of 2024, revenue was $48 billion.

GM's second-quarter earnings per share and revenue posted the first year-over-year declines since the fourth quarter of 2023, with the drop in revenue being the largest year-over-year decline since the fourth quarter of 2021, CNBC noted.

General Motors' net income attributable to shareholders was $1.9 billion in the second quarter, down 35.4% from a year earlier. 

GM's North American margin, adjusted for earnings before interest and taxes, was 6.1%. A year ago, the figure was 10.9%.

GM sold 974,000 vehicles in the second quarter - less than the StreetAccount forecast that expected 1 million. Electric vehicle sales totaled 46,300 units.

"While duties are likely to dominate headlines, results were better than expected in one of the most unpredictable quarters in history," Citi analyst Mike Ward wrote in a note cited by Barron's. 

CFRA analyst Garrett Nelson said investors were expecting a higher outlook. GM's decision to suspend share buybacks in the second quarter may also have disappointed investors who wanted a greater return on capital, he wrote. The company had already resumed the buyback in July, Nelson added.

On the eve of quarterly reporting, Benchmark analyst Mickey Legg initiated coverage on GM stock with a Buy rating and $65 target price. It is up 22.6% from the July 21 closing price. "Despite recent market volatility related to duties and geopolitical uncertainty, GM's core business remains resilient due to improving fundamentals, prudent investment policies and strategic positioning in both the internal combustion engine and electric vehicle segments," he wrote in a research report Monday. His assessment publishes Barron's.

Overall, of the 31 analysts who follow General Motors, 16 advise buying (Buy and Overweight), 12 are neutral (Hold) and only three advise selling (Underweight and Sell). Analysts' average target price is 5.6% above the July 21 closing price.

This article was AI-translated and verified by a human editor