Trump tariffs take a US$1 billion bite out of GM earnings; shares fall
The largest US carmaker by sales said it expects the tariff impact to worsen in the third quarter and stuck to a previous estimate that trade headwinds threaten to hit the bottom line by US$4 billion to US$5 billion. GM said it could take steps to mitigate at least 30 per cent of that impact. Shares fell about 6 per cent in early trading. The carmaker's revenue in the quarter ended June 30 fell nearly 2 per cent to about US$47 billion from a year ago. Its quarterly adjusted earnings per share fell to US$2.53 compared with US$3.06 a year earlier.
Analysts on average expected adjusted profit of US$2.44 per share, according to data compiled by LSEG. GM was one of several corporations that revised its annual guidance due to the impact of the president's tariffs. As a result, it lowered its forecast for annual adjusted earnings before interest and taxes to a range of US$10 billion to US$12.5 billion. The company on Tuesday stood by that forecast.
Beyond tariffs, GM's underlying business in the quarter was solid. Sales in the US market – its main profit centre – rose 7 per cent, while the company continued to command strong pricing on its pickup trucks and SUVs. GM swung back to a small profit in China, after losing money there a year earlier.
Full-size trucks and SUVs, including the Chevrolet Silverado electric pickup, helped GM's strong sales in this year's second quarter. Photo: GM/TNS
GM hasn't moved to raise already high average sticker prices enough to recoup tariff costs, instead opting to absorb the blow by cutting costs and repatriating some production. Chief Executive Mary Barra hinted at the challenges adjusting to the new reality in a letter to shareholders.
'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 US from Mexico.
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