General Motors (GM, Financial) is feeling the sting of President Donald Trump's trade policy. The automaker took a $1.1 billion hit from new tariffs, dragging net income down 35% to $1.9 billion. Adjusted EPS came in at $2.53—above the $2.33 consensus—but well off the $3.06 posted a year earlier. That wasn't the only weight on margins: GM also absorbed $300 million in recall-related costs, $600 million from excess EV inventory, and $200 million from weaker fleet pricing. Notably, it's not passing costs on to consumers—yet. Instead, the company is cutting expenses and reshoring some production to Michigan, Kansas, and Tennessee.
Despite the squeeze, GM managed to grow U.S. vehicle sales and logged a $175 million improvement in China profits compared to last year. Still, EBIT in the core North American business fell by $2 billion, and revenue dipped 1.8% to $47.1 billion. The company acknowledged that only a third of its $4–$5 billion tariff exposure is expected to be offset later this year. CEO Mary Barra framed the situation as a reset moment, pointing to the need to adapt to "new trade and tax policies" while navigating a "rapidly evolving tech landscape." The shift includes plans to bring more SUV and pickup production back from Mexico.
For now, GM is sticking with its full-year EBIT guidance of $10 billion to $12.5 billion—lower than the $15.7 billion target floated back in January. Evercore analyst Chris McNally flagged that steady forecast as a letdown for investors hoping for a rebound narrative. Still, with federal EV subsidies disappearing, a glut of unsold plug-ins, and trade friction rising, the flat outlook might reflect realism more than caution. GM may have avoided the worst-case scenario—for now—but the road ahead remains anything but smooth.
