General Motors earnings plummet amid trade headwinds

General Motors has reported a significant decline in earnings, with its profits falling by a third due to a hefty £1.1 billion impact from tariffs. The carmaker’s core profit for the second quarter dropped 32 per cent to £3 billion as it grapples with ongoing fallout from trade policies imposed by the Trump administration.

The Detroit-based automotive giant is feeling the pressure primarily in its US business, which serves as its main profit centre. The company has indicated that import duties on vehicles manufactured in Canada, Mexico, and South Korea are taking a considerable toll on its financial performance.

Looking ahead, General Motors anticipates that the adverse effects of tariffs will worsen in the third quarter. The firm estimates that trade headwinds could result in up to £5 billion in lost profits, a troubling figure that casts a shadow over its future outlook.

In response to these challenges, the company is making concerted efforts to mitigate the financial blow. It aims to offset at least 30 per cent of the tariff impact through strategic adjustments in manufacturing, targeted cost initiatives, and revising its pricing strategy.

Mary Barra, the company’s chief executive, has conveyed that General Motors is keen to significantly reduce its exposure to tariffs. The firm plans to funnel £4 billion into its US assembly plants, optimising production capabilities while ensuring competitiveness in the market.

Despite the slow growth in the electric vehicle industry, General Motors remains optimistic about the long-term profitability of electric vehicle production. The company continues to adapt to shifting consumer demand while prioritising its customers and leveraging investments in battery technology.

As these developments unfold, investors will be watching closely how General Motors navigates these turbulent waters in the coming months.