logo
GM's $1.1 billion tariff hit bolsters mounting evidence that Americans are the ones footing the bill for Trump's import taxes

GM's $1.1 billion tariff hit bolsters mounting evidence that Americans are the ones footing the bill for Trump's import taxes

Yahoo2 days ago
had a more than $1 billion chunk taken out of its profits due to tariff costs, the company reported on Tuesday. GM, as well as other automakers like Stellantis, have contributed to evidence indicating American companies and consumers—not exporters—are the ones paying for tariffs.
General Motors is the latest U.S. auto giant to say tariffs have taken a chunk from their earnings. The company beat earnings expectations on Tuesday, but reported a decline in second-quarter profits, including a $1.1 billion hit as a result of hefty import taxes.
GM reported a 2% dip in sales to $47 billion, as well as $1.9 billion in quarterly profits, compared to $2.9 billion in the same period last year.
Anticipating the impact of President Donald Trump's auto tariff policy—which outlined a 25% levy for many imported vehicles—GM withdrew its annual guidance last quarter, predicting an up to $5 billion pummelling from the levies. The company announced last month plans to invest $4 billion in domestic manufacturing plants in order to offset the cost of imports, as well as increase production capacity. Still, GM's reliance on compact cars made in South Korea has made it vulnerable to the levies.
'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,' CEO Mary Barra wrote in a letter to shareholders on Tuesday.
GM's rival Stellantis, which owns Jeep and Ram Trucks among other brands, announced on Monday $2.7 billion in net losses for the first half of the year as North American sales continued to slump. Those struggles were exacerbated by the 'early effects of U.S. tariffs,' according to Stellantis, which had a more than $350 million negative impact on the company.
America is eating tariff costs
The auto companies' tariff hit reinforced concerns—and emerging evidence—that Americans are the ones footing the bill for Trump's sweeping tariff policy.
Despite the U.S. Treasury collecting a record-setting $100 billion in customs duties so far this year, there has not been a meaningful reduction in the price of imported goods indicating exporters absorbing increased costs on their ends, according to a Deutsche Bank analyst note published on Monday. Instead, import prices have remained steady through June.
'The top-down macroevidence seems clear: Americans are mostly paying for the tariffs,' Deutsche Bank analyst George Saravelos said in the note.
Saravelos posited that because the Consumer Price Index has so far indicated only modest levels of inflation, 'it follows that American importers are mostly absorbing the tariffs into their profit margins.'
The phenomenon is exemplified by Stellantis and GM eating billions in tariff costs.
Auto tariffs are no exception
Bernstein senior analyst Daniel Roeska said auto companies have started to exhaust their strategy of absorbing tariff costs into their own margins as car prices are poised to skyrocket later this year.
'There are only two people who can pay for [tariffs]: either the shareholders or the consumer,' Roeska told Fortune. 'And in the end, there's going to be some sharing between those two halves. And so our view has been and continues to be that prices for cars are going to push up in the second half.'
There's already indications American consumers will be the next to take the tariff punch. Car companies are beginning to roll back discounts and incentives implemented months earlier to boost sales, as evidenced by Ford Motors switching away from its employee discount plan for prospective buyers in favor of a $0 down and 0% interest or financing plan. While GM's plan to move some manufacturing to the U.S. will help the company save on tariff and transport costs, it will also incur steeper labor costs. The strategic move is a good one, according to Roeska, but it illustrates that companies will largely encounter trade offs when it comes to managing the inevitable impacts of tariffs.
'There's not much you can do,' Roeska said. 'If the policy is to put tariffs on cars, then that will increase the cost of cars, and ultimately, that will likely increase the price of cars.'
This story was originally featured on Fortune.com
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Trump can't save Olympic sports through executive order, but he can by funding them
Trump can't save Olympic sports through executive order, but he can by funding them

Yahoo

time22 minutes ago

  • Yahoo

Trump can't save Olympic sports through executive order, but he can by funding them

There is probably little good that can come from President Trump's executive order on college sports given that it's legally questionable, vaguely written in terms of enforcement and an unpredictable stick of dynamite thrown into the middle of legislative movement on the current SCORE Act making its way through the House of Representatives. But rather than trying to limit by presidential edict how and what college athletes get paid, there is something Trump could do that would address one of the major concerns for his administration. Much of the executive order focuses on protecting opportunities for Olympic sport athletes. With athletic budgets getting squeezed by up to $20.5 million going directly to athletes thanks to the House vs. NCAA settlement, there's widespread fear that non-revenue programs across the country will be on the chopping block. And given the NCAA's role as the de facto development system for much of America's success at the Olympics every four years, a significantly smaller allotment of scholarships could mean both fewer educational opportunities for young people and an erosion of America's standing on the medal table. So here's a suggestion for the Trump Administration: Want to leave a legacy for Olympic sports? Use government money to fund them. Dan Wolken: Attempts to curb payments to college athletes keep failing. There's only one way forward. In nearly every country around the world except the United States of America, federal dollars are funding Olympic sports programs. But here, it's the responsibility of the U.S. Olympic and Paralympic Committee and college athletic departments. The former is funded by corporate sponsorships and private donations. The latter is funded by college football. That system, imperfect as it may be, has worked for a long time. If it doesn't work anymore because the economics of college sports have changed, then we need to tweak the system. And if international domination of swimming, track and field and gymnastics is a priority for America, then what's the problem with taxpayers having a little skin in the game? It's not as if public dollars paying for sports is a new concept in this country. You can find the evidence by driving past nearly any pro stadium or arena if you live in a major city. Surely there are some smart people who can figure out how to build a federally funded joint partnership between the USOPC, various National Governing Bodies and the NCAA that coordinates and supports elite athlete development in a handful of Olympic sports that matter most, allowing schools to focus on providing opportunities and educating those who need athletic scholarships to attend college. Admittedly, this idea is a little radical, potentially impractical and rife with unintended consequences. But one way it could work, at least in theory, is that a certain percentage of the top American recruits in the key Olympic pipeline sports would go into a recruiting pool. When they choose a school, this government-funded organization would pay for the four-year scholarship, attach an NIL payment for the athlete to represent the organization and provide a grant to the school as reimbursement for the development cost. To make it more equitable, schools would be limited to a certain number of recruits every year from that elite pool of athletes. The rest of the roster would be filled with either foreign athletes or non-elite American recruits that they must pay for themselves. One obvious criticism of this plan is that smaller schools would get squeezed out even further, given that they're more likely to have a budget crisis than a Texas or an Ohio State and less likely to recruit elite athletes. This might require the NCAA to rethink how it stratifies schools into three divisions and instead move toward a two-tiered model where you either meet certain scholarship and funding standards to be in the Olympic development division or compete in the non-Olympic division, which would functionally be more like intramural or club sports. And maybe none of this is workable. But the point is, it's time to come up with some creative, bold solutions rather than just whining about how schools can't afford to pay for their non-revenue sports anymore. For many, many years, the USOPC has gotten a free ride on the back of the NCAA system, which has only been possible because universities illegally colluded not to share revenues with the athletes that played a significant role in generating them. But the good news is, all the systems are in place to keep Team USA's supremacy intact. There has to be a way for more formal collaboration between the USOPC and the NCAA that can save scholarships, development opportunities and teams from being cut. It just needs the funding. And the federal government can make that happen. Trump can make that happen. If he wants a real and lasting legacy as a president who kept the Olympic movement stable at a time of necessary change in college sports, that's how he can do it. Not an executive order destined to be picked apart and ultimately made irrelevant. This article originally appeared on USA TODAY: Donald Trump can't save Olympic sports through EO, but could do this

US, Mexico reach agreement on reducing sewage flows across border and into San Diego
US, Mexico reach agreement on reducing sewage flows across border and into San Diego

Yahoo

time22 minutes ago

  • Yahoo

US, Mexico reach agreement on reducing sewage flows across border and into San Diego

By Daniel Trotta (Reuters) -The United States and Mexico on Thursday reached an agreement aimed at finding a permanent solution to a decades-long sewage crisis, in which Mexican sewage has flowed into the Tijuana River and across the U.S. border, emptying into the Pacific Ocean near San Diego. U.S. Environmental Protection Agency Administrator Lee Zeldin and Mexican Environment Minister Alicia Barcena signed a memorandum of understanding in Mexico City, in which Mexico agreed to expedite the expenditure of $93 million worth of improvements to the Tijuana sewage system and commit to several projects to account for future population growth and maintenance. Some of the Mexican projects would now be completed four years ahead of schedule, the EPA said. The U.S. in turn committed to releasing funds that would complete the expansion of a sewage treatment plant by the end of August. The plant is on the U.S. side of the border but treats sewage pumped in from Mexico. "This is a huge win for millions of Americans and Mexicans who have been calling on us to end this decades-old crisis," Zeldin said in a statement. Though both countries have long cooperated on water and sewage issues, the Tijuana sewage crisis, exacerbated by rapid growth in the border city and an underfunding of infrastructure projects, has often been a sore point. The deal comes amid other cross-border tensions on matters including immigration, drug-trafficking and gun-running. "I want to emphasize that what we are really doing is trying to solve, once and for all, the problem of wastewater in the Tijuana River. And I believe we are also doing it jointly, with both countries making commitments," Barcena told a joint press conference with Zeldin. Millions of gallons of treated and untreated sewage from Tijuana's overburdened system makes its way daily into the Tijuana River and reaches the ocean in the San Diego suburb of Imperial Beach, which has posted "Keep out of Water" signs on its beach for much of the past four years, depriving surfers of waves and Imperial Beach of crucial summer tourism revenue. The International Boundary and Water Commission, a body governed by U.S.-Mexican treaty agreements, has measured up to 50 million gallons per day (2,200 liters per second) of sewage-contaminated water from the Tijuana River toward Imperial Beach. Around half was raw sewage with the remainder a mix of treated sewage, groundwater and potable water from Tijuana's leaky pipes, IBWC officials have said. The IBWC operates the sewage treatment plant north of the border, which will increase its capacity to 35 million gallons per day, up from 25 million gallons per day, the EPA said. Every extra gallon treated is a gallon kept out of the ocean. Barcena said Mexico also committed to doubling the capacity of the San Antonio de los Buenos sewage treatment plant, which was recently repaired after years of delay. Before the recent repairs, the plant 6 miles (10 km) south of the border had been spewing at least 23 million gallons of sewage per day (1,000 liters per second) into the Pacific Ocean, whose prevailing currents flow north much of the year, further fouling San Diego waters.

Faraday Future Hosts Successful Capitol Hill Club Reception Showcasing Commitment to American Manufacturing and Innovation
Faraday Future Hosts Successful Capitol Hill Club Reception Showcasing Commitment to American Manufacturing and Innovation

Yahoo

time22 minutes ago

  • Yahoo

Faraday Future Hosts Successful Capitol Hill Club Reception Showcasing Commitment to American Manufacturing and Innovation

WASHINGTON, July 24, 2025--(BUSINESS WIRE)--Faraday Future Intelligent Electric Inc. (NASDAQ: FFAI) ("Faraday Future", "FF" or the "Company"), a California-based global shared intelligent electric mobility ecosystem company, held a well-attended and impactful reception at the Capitol Hill Club this week, drawing over a dozen members of Congress and key stakeholders from across the policy and business landscape. The event served as a platform to highlight Faraday Future's ongoing efforts to bring advanced electric vehicle innovation and manufacturing jobs back to American soil. "We at Faraday Future have expressed our desire to play a role in the great American comeback we are seeing under this Administration, particularly as it relates to the automotive industry, which has been the bedrock of American industry for ages," said John Schilling, Global Director of Communications and Public Relations at Faraday Future. The event featured both FF's cutting-edge FF 91 2.0 electric supercar as well as its recently unveiled FX Super One MPV model. Attendees got a firsthand look at both products and experienced the technology, craftsmanship, and vision driving FF's expansion strategy. FF leadership, including FX CEO Max Ma, also met with staff at the White House earlier this week, which included an open dialogue on a number of policy topics such as tariffs, U.S. manufacturing and innovation. FF looks forward to continuing to work closely with the White House in the near future to promote the long-term prosperity of America's high-end manufacturing sector, centered around the automotive industry and its broader ecosystem. "We were extremely honored by the attendance of numerous members of Congress who were interested in both our vehicles, because who wouldn't be, but more importantly, our story about building and employing American," continued Schilling. "We're committed to expanding production here at home and look forward to working with Congress and the Trump Administration to help make that vision a reality." Faraday Future's leadership emphasized that the company is aligning with the current Administration's vision to reindustrialize America and revitalize core manufacturing sectors. With plans to increase domestic production and invest in U.S. jobs, Faraday is proud to be a part of a new chapter in American innovation. ABOUT FARADAY FUTURE Faraday Future is a California-based global shared intelligent electric mobility ecosystem company. Founded in 2014, the Company's mission is to disrupt the automotive industry by creating a user-centric, technology-first, and smart driving experience. Faraday Future's flagship model, the FF 91, exemplifies its vision for luxury, innovation, and performance. The FX strategy aims to introduce mass production models equipped with state-of-the-art luxury technology similar to the FF 91, targeting a broader market with middle-to-low price range offerings. FF is committed to redefining mobility through AI innovation. Join us in shaping the future of intelligent transportation. For more information, please visit FORWARD LOOKING STATEMENTS This press release includes "forward looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words "plan to," "can," "will," "should," "future," "potential," and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include, among others: the Company's ability to secure necessary agreements to license or produce FX vehicles in the U.S., the Middle East, or elsewhere, none of which have been secured; the Company's ability to homologate FX vehicles for sale in the U.S., the Middle East, or elsewhere; the Company's ability to secure the necessary funding to execute on its AI, EREV and Faraday X (FX) strategies, each of which will be substantial; the Company's ability to secure necessary permits at its Hanford, CA production facility; the Company's ability to secure regulatory approvals for the proposed Super One front grill; the potential impact of tariff policy; the Company's ability to continue as a going concern and improve its liquidity and financial position; the Company's ability to pay its outstanding obligations; the Company's ability to remediate its material weaknesses in internal control over financial reporting and the risks related to the restatement of previously issued consolidated financial statements; the Company's limited operating history and the significant barriers to growth it faces; the Company's history of losses and expectation of continued losses; the success of the Company's payroll expense reduction plan; the Company's ability to execute on its plans to develop and market its vehicles and the timing of these development programs; the Company's estimates of the size of the markets for its vehicles and cost to bring those vehicles to market; the rate and degree of market acceptance of the Company's vehicles; the Company's ability to cover future warranty claims; the success of other competing manufacturers; the performance and security of the Company's vehicles; current and potential litigation involving the Company; the Company's ability to receive funds from, satisfy the conditions precedent of and close on the various financings described elsewhere by the Company; the result of future financing efforts, the failure of any of which could result in the Company seeking protection under the Bankruptcy Code; the Company's indebtedness; the Company's ability to cover future warranty claims; the Company's ability to use its "at-the-market" program; insurance coverage; general economic and market conditions impacting demand for the Company's products; potential negative impacts of a reverse stock split; potential cost, headcount and salary reduction actions may not be sufficient or may not achieve their expected results; circumstances outside of the Company's control, such as natural disasters, climate change, health epidemics and pandemics, terrorist attacks, and civil unrest; risks related to the Company's operations in China; the success of the Company's remedial measures taken in response to the Special Committee findings; the Company's dependence on its suppliers and contract manufacturer; the Company's ability to develop and protect its technologies; the Company's ability to protect against cybersecurity risks; and the ability of the Company to attract and retain employees, any adverse developments in existing legal proceedings or the initiation of new legal proceedings, and volatility of the Company's stock price. You should carefully consider the foregoing factors and the other risks and uncertainties described in the "Risk Factors" section of the Company's Form 10-K filed with the SEC on March 31, 2025, and other documents filed by the Company from time to time with the SEC. View source version on Contacts Investors (English): ir@ Investors (Chinese): cn-ir@ Media:

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store