For everyone thinking that maybe tariffs wouldn’t have a big impact on the U.S., automaker General Motor’s earnings release and call on Tuesday morning, July 22, were a reminder of how bad they can be.
The Numbers
Revenue was down 1.8% year over year, from $47.97 billion to $47.12 billion. A little off. However, net income attributable to stockholders, also known as profit, for the quarter was down by $1.038 billion, or -35.4%, year over year.
For the full half year, revenue was up 0.2% year-over-year, from $90.98 billion in 2024 to $91.14 billion in 2025. Net income, though, dropped from $5.91 billion to $4.68 billion, a reduction of $1.23 billion or -20.9%.
In Q2, there was a net impact of $1.1 billion due to tariffs, and that was “slightly lower” than expected. That could have come in many ways. Steel and aluminum faced tariffs of 25%. There were tariffs on goods coming from Canada and Mexico, and significant portions of automobile manufacturing are done in both countries. None of this counts the tariffs on copper, which are supposed to go into effect next month. The company expects that third-quarter net tariff costs will be even higher than in Q2.
Real Costs Of Tariffs
“As we previously mentioned, mitigation efforts will take time to yield results, limiting their effect on the second quarter,” GM Chief Financial Officer Paul Jacobson said during the earnings call. “However, we’re still tracking to offset at least 30% of the $4 billion to $5 billion full year 2025 tariff impact through strategic actions such as manufacturing adjustments, targeted cost initiatives and consistent pricing.”
He also said that “our gross tariff impact remains unchanged at $4 billion to $5 billion this year as we continue to produce and import vehicles from Canada, Mexico, and Korea to avoid interruptions for our customers and dealers.”
The amount of money they will have to spend to try reducing further tariffs is not mentioned but is likely large. This includes adding 300,000 units of U.S. capacity for light-duty pickups and full-size SUVs and crossovers, all of which are high-margin vehicles that can bear the additional costs of domestic manufacturing. They are also increasing utilization of existing U.S. capacity, which is a tacit acknowledgment that manufacturing and assembly in Mexico is largely a way to reduce labor costs by cutting jobs here.
Tariff Implications
This is just one admittedly very large company. The supposed point of the tariffs was to encourage domestic manufacturing. Perhaps that will ultimately work, but at what cost? Domestic providers won’t be the salvation because they have been raising prices as tariffs on foreign goods give them room to do so.
Eventually, prices will go up. Companies will look to automate as much as possible, cutting jobs and wages going forward, as materials, components, and inventory continue to increase in price. The impact on employment could likely be the opposite of what tariff proponents said would happen.
There are additional waterfalls of problems. When people lose jobs, they stop spending as much because they don’t have the money. When corporate profits hurt, for whatever reason, values can drop. GM shares fell 8.12% on Tuesday. That was a market capitalization drop of $4.15 billion, 8.1%, overnight. Such changes have impacts on retirement portfolios and the holdings of pension funds. It’s like an unofficial additional tax.
The next two or three months should offer more insight into the actual impact of tariffs. Strap in, it could get bumpy.