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General Motors' second-quarter earnings for 2025 revealed a mixed picture: solid vehicle sales in the U.S. but a sharp earnings decline tied to tariffs. The automaker absorbed a $1.1 billion hit from new trade measures, mostly tied to imports from Mexico and South Korea—pushing its quarterly net income down 35%.
Despite the setback, GM's performance slightly exceeded Wall Street's expectations. Adjusted earnings came in at $2.53 per share, ahead of the $2.44 consensus. However, the company acknowledged that the pain isn't over. Executives maintained their estimate that tariffs will reduce full-year earnings by $4 billion to $5 billion, with the third quarter expected to be more damaging than the second.
"We're actively working to localize more production," said CEO Mary Barra during Tuesday's earnings call, pointing to $4 billion in new U.S. investments announced last month. That package includes upgrades to facilities in Michigan, Kansas, and Tennessee, and a reshoring of Chevy Blazer production from Mexico to the U.S.
GM's adjusted earnings before interest and taxes fell to $3 billion, down 32% from a year earlier. Revenue declined nearly 2% to $47 billion. Meanwhile, U.S. sales rose 7% year-over-year, thanks in large part to sustained demand for full-size trucks and SUVs. Strong pricing on vehicles like the Silverado and Escalade helped buffer the tariff blow.
The company also managed a return to profitability in China, where it had reported losses the previous year. But while EV growth has slowed, GM's pivot back toward combustion-engine vehicles has accelerated. "We remain committed to electric vehicles," Barra said, "but we recognize the need to adapt in a shifting market."
Barra's comments come as the auto industry responds to the rollback of federal EV tax incentives. Under recent legislation, the $7,500 new-EV and $4,000 used-EV credits will expire by the end of September. The law also removes penalties for not meeting fuel economy standards, creating more breathing room for gas-powered production.
Other automakers are bracing as well. Stellantis reported a €300 million tariff cost in the first half of the year. Ford, set to report earnings next week, is also expected to be affected.
