GM lost $1 billion from Trump's tariffs. The damage may only be starting

In its earnings presentation, released early Tuesday, GM described the facts in the usual plain language of such presentations:

“Tariff update… Calendar 2025 gross tariff impact unchanged at $4–5B.”

“$1.1B net impact in Q2, reflecting minimal mitigation offsets.”

“Expect Q3 net impact to be higher than Q2 due to timing of indirect tariff costs.”

In plain English, that means President Donald Trump’s tariffs cost the automaker over $1 billion in the second quarter, and that the company expects the impact to become more pronounced in the next quarter — totaling $4 to $5 billion for the full calendar year.

But let's look at the hit this quarter to better understand it.

Explaining the $1.1 billion tariff hit

The $1.1 billion in the second quarter comes from both direct and indirect effects. Some $800 million came from tariffs increasing the cost of car components and manufacturing materials. The other $300 million resulted from broader operating pressures caused by the tariffs — basically, second-order costs brought on by the disruption, staff time, and expense to do with compliance and regulatory navigation, etc.

Because of the $1.1 billion tariff headwind, GM maintained flat earnings year-over-year. In the circumstances, that’s hardly a bad result, even as it reflects a literal constraint on growth. The company managed to offset the margin compression through selling more units, raising prices, and tight cost controls.

Absent the $1.1 billion tariff impact, the company’s earnings would have been approximately $4.3 billion. That’s 34% higher than the reported $3.2 billion, implying tariffs cut potential by roughly a third.

The outlook from here

The tariff fallout hits as the U.S. auto industry pivots back toward combustion-engine vehicles. GM is investing $4 billion in truck and SUV production, reflecting slowing EV demand and the looming end of key federal tax credits.

Meanwhile, Trump’s new trade policies — targeting imported vehicles and parts — have thrown strategic planning into disarray. GM had already pulled guidance earlier this year citing tariff uncertainty, paused its stock buyback program, and delayed its Q1 earnings call.

Guidance remains suspended due to tariff-driven uncertainty, with GM only explicitly offering cost projections, not earnings projections. In plain English, that means trade wars and policy instability are no longer peripheral risks. They’re right at the heart of the story.

Shares of GM are down roughly 3%, premarket, on the news.