GM profit hurt by over $1B in tariffs — and shares tumble as impact expected to worsen
The largest US automaker 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 $4 billion to $5 billion.
GM said it could take steps to mitigate at least 30% of that impact.
Shares fell about 6% in early trading.
3 GM's revenue in the quarter fell nearly 2% to about $47 billion from a year ago. Its quarterly adjusted earnings per share fell to $2.53 compared with $3.06 a year earlier.
Bloomberg via Getty Images
The automaker's revenue in the quarter ended June 30 fell nearly 2% to about $47 billion from a year ago. Its quarterly adjusted earnings per share fell to $2.53 compared with $3.06 a year earlier.
Analysts on average expected adjusted profit of $2.44 per share, according to data compiled by LSEG.
Its adjusted earnings before interest and taxes fell 32% to $3 billion.
GM was among corporations that revised annual guidance due to the impact from President Trump's tariffs, lowering it to an annual adjusted core profit of between $10 billion and $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 center – rose 7%, 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.
Analysts said GM may need to cut investment in future projects or find other ways to trim spending to offset the effect of tariffs.
Jeep-maker Stellantis on Monday warned that tariffs would significantly affect results in the second half of 2025, and said tariffs cost it about 300 million euros in the first half of the year.
Shares of rival Ford Motor, and US-traded shares of Stellantis fell about 1% Tuesday morning.
3 Analysts said GM may need to cut investment in future projects or find other ways to trim spending to offset the effect of tariffs. CEO Mary Barra, above.
AP
The automaker took several steps in recent months to bolster its combustion-engine operations through increased investment in its US factory base, calling into question its goal of ending the production of gas-powered cars and trucks by 2035.
'Despite slower EV industry growth, we believe the long-term future is profitable electric vehicle production, and this continues to be our North Star,' GM CEO Mary Barra told analysts Tuesday.
GM announced in June that it would invest $4 billion at three facilities in Michigan, Kansas, and Tennessee, including a plan to move production of the Cadillac Escalade and increase output of its two big pickup trucks. It added production of its previously Mexico-produced Chevy Blazer to the Tennessee plant.
The automaker imports about half of the vehicles it sells in the US, mainly from Mexico and South Korea.
Crosstown rival Ford produces about 80% of its US-sold vehicles domestically. Ford is expected to report second-quarter results next week.
3 GM imports about half of the vehicles it sells in the US, mainly from Mexico and South Korea.
REUTERS
Car companies are increasingly shifting their focus to bolstering the core lineup of gas trucks and SUVs, as the growth rate of EV sales has slowed.
Demand for battery-powered models already has slowed after rapid growth earlier this decade.
The trend is intensified by the pending disappearance of government support for the battery-powered models.
Sweeping tax and budget legislation approved by Congress will eliminate $7,500 tax credits for buying or leasing new electric vehicles and a $4,000 used-EV credit at the end of September.
Trump also signed tax and budget legislation that eliminates fines for failures to meet fuel economy rules, a move that makes it easier to build more gas-powered vehicles.
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Yahoo
17 minutes ago
- Yahoo
‘You just added a third building': Powell fact checks Trump's Fed renovation as awkward hard-hat visit turns tense
President Donald Trump's attempt to shame Federal Reserve Board of Governors chair Jerome Powell over the cost of a long-running renovation to the central bank's Washington headquarters went horribly wrong on Thursday when Powell had a ready response for the president's accusations during a tour of the construction site. After viewing parts of the costly renovation, Trump and Powell stopped briefly to speak to reporters who'd traveled to the Federal Reserve headquarters with the president. Trump said the cost of the years-long project was now 'about $3.1 billion' rather than the $2.7 billion previously stated by Powell. 'So we're taking a look, and it looks like it's about 3.1 billion went up a little bit or a lot. So the 2.7 is now 3.1 it just came out,' he said reading from a piece of paper, as Powell looked on and shook his head in the negative before interjecting. The chairman replied: 'I haven't heard that from anybody' and asked if the paper Trump was reading from came from the central bank. At that point, Trump handed him the paper and continued talking while Powell pulled out his reading glasses to look. He then told the president that the higher number he was claiming included a separate project that wasn't part of the renovation at issue. 'You just added in a third building,' he said. When Trump replied that the building in question was currently 'being built,' Powell spoke up once more to disabuse the president of his misunderstanding of what he was reading. He told Trump that he was mistakenly counting long-completed renovations to a building named for William Martin Jr., who served as Fed chair from 1951–1970, as part of the renovation of the Fed's main headquarters. 'No, it's been it was built five years ago. We finished Martin five years ago,' he said. Asked by reporters if he expects more overruns on the lengthy project, Powell said the Fed is 'ready' for any but doesn't expect more. 'We have a little bit of a reserve that we may use, but no,' he said before adding that he expects to project will wrap in 2027 — a year after his term as chairman is set to end. Trump and his allies have said the $2.5 billion renovation of the Fed headquarters and a neighboring building reflects an institution run amok — a belief they had hoped to verify in an afternoon tour of the construction site. The site visit by the president is an attempt to further ratchet up pressure on Powell, whom the Republican president has relentlessly attacked for not cutting borrowing costs. Trump's attacks have put the Fed, a historically independent institution, under a harsh spotlight. Undermining its independence could reduce the Fed's ability to calm financial markets and stabilize the U.S. economy. The president has made no secret of his distaste for Powell, whom he nominated to lead the Federal Reserve in 2017, primarily because of Powell's refusal to lower interest rates, particularly in light of Trump's decision to levy tariffs. Powell has said that the central bank needs time to see what effects tariffswill have on inflation and employment before making a determination on interest rates. This has prompted Trump to call Powell a 'stupid person.' The president can do little to remove Powell. Joe Biden re-nominated Powell for another five-year term in 2021 based on his steady leadership during the 2020 COVID-19 pandemic, and his term would expire in May. Federal statute says the president can only remove Powell 'for cause.' For a time, it appeared as if Trump and his allies had found such a cause in the costly renovation of the Fed's headquarters. But Trump, a former real estate developer, appeared to soften his criticisms of the project after viewing it himself. Appearing in his element while sporting a hard hat, Trump said he would like to see the project finish. 'In many ways it's too bad it started, but it did start, and it's been under construction for a long time. Gonna be it's going to be a real long time, because it looks like it's got a long way to go,' he said. A short time later, he told reporters that he'd had a 'very good tour' and declined to repeat his earlier criticisms of the project. He did, however, give a detailed description of the project's complexity with regard to a basement being dug beneath the Washington, D.C. water table. 'I was given a very nice tour by the head of construction. And, you know, look, if you look over here, they're trying to open up the basement. When you open up a basement, first of all, it's the worst space — always. 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He added that he'd be 'watching' the project and hoped to add his own expertise, citing his eponymous real estate company's renovation of the historic Old Post Office building into the hotel that became a MAGA hotspot during his first term before it was sold in 2021. 'The total Construction cost was a small fraction of the Fed Building's cost, and it is many times the size. With all of that being said, let's just get it finished and, even more importantly, LOWER INTEREST RATES!' he said. Despite the president's past criticism, it appears he has backed down from his implicit threat to fire Powell due to negative reaction from markets. Last week during an Oval Office press opportunity, Trump told reporters it was 'highly unlikely' that he would upend nearly a century of precedent by attempting to sack Powell less than a day after he reportedly polled a group of Republican lawmakers on whether he should sack the central bank boss during a Tuesday night meeting in the Oval Office after the 12 House Republicans blocked a cryptocurrency bill favored by the president. With additional reporting by agencies and Washington Bureau Chief Eric Garcia
Politico
17 minutes ago
- Politico
Trump needles Powell at Fed campus
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It was the latest escalation of a monthslong pressure campaign against the United States' independent central bank as Trump pummels Powell for refusing to lower interest rates. Trump, who claims the higher interest rates are costing American taxpayers $1 trillion a year in additional borrowing costs, has repeatedly called for Powell to step down and even drafted a letter to fire him. 'We would be helped if interest rates would come down, but we're going to see how the board rules on that soon,' Trump said. 'I'd love to see them come down a lot, but we have a country that's thriving.' Powell has said he expects to lower rates sometime later this year, but has held off as he and his fellow officials watch whether Trump's tariffs lead to significantly higher inflation. 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Business Wire
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