In April 2025, Donald Trump announced major tariffs on most of the country’s trading partners. He has gone back and forth on these measures. Soon after he announced his plan, he placed it on pause so he could negotiate with other countries.
The tariffs may not be completely in place yet, but they have been able to roil the market as companies try to make their way through the uncertainty. Still, companies like General Motors are being hit hard, as the company announced big losses for the second quarter of 2025.
This Was GM’s Second Big Loss in Less Than a Year
General Motors was long the biggest automaker in the world until it was overtaken by Toyota in 2008. Still, GM is the largest automaker in the United States and features brands like Chevrolet, Buick, Cadillac, and GM under its umbrella.
The company had a loss of $3 billion in the final quarter of 2024 and has now suffered a profit loss of $1.1 billion in the second quarter of this year. General Motors is heavily attributing those losses to Donald Trump’s tariffs.
Trump Has Presented Himself as a Champion of the US Auto Industry
When the president talks about his tariffs, he says that the aim of the measures was to protect American manufacturing. He visited Michigan during his 2024 campaign and promised that he would be strengthening the auto industry in the state.
“I’m proclaiming,” he told auto-workers, “that by the end of my term, the entire world will be talking about the ‘Michigan Miracle’ and the stunning rebirth of Detroit.” That might still be Donald Trump’s plan over the course of his presidency, but the early results don’t look good for him.
Some Tariffs Paid by GM Weren’t Paused in May
While Donald Trump did announce a pause in some tariffs weeks after his initial announcement, that did not apply to auto parts and vehicles imported from China. Those items had a 25% tariff applied.
General Motors has a number of plants located in China. That means that every part and vehicle the company has brought over from those plants have had a 25% tax slapped on them. And that is a big part of why the company lost so much profit in the second quarter of this year.
GM is Looking at Other Markets for Auto Sales
GM, like other car manufacturers, has realized that it could counteract the tariffs, in a way, by selling its cars in other countries. And one of those countries that presents a strong market for American cars is China. GM reported that its sales in China during the second quarter went from $4.7 billion to $6.1 billion. This helps mitigate some of their losses.
General Motors specifically sells brands like Buick and Cadillac in China. This is done through their partnership with SAIC Motors. This agreement also allows them to sell electric cars, as these vehicles made up 25% of sales in the last quarter.
GM May Also Have to Move or Close Plants
Now that the company is being hit with tariffs, General Motors will have to look for different ways to respond. One of these measures could be moving plants out of China, the country president Trump seems most motivated to get into a tariff war with.
It is also important to consider the biggest reason why GM had plants in South Korea and China: the land, construction, and labor are much less expensive. If those plants are moved, they could end up in more expensive areas with more expensive labor, causing the company to cut costs in other ways.
Stellantis, Another Major Automaker, Is Also Making Changes
Stellantis is the second biggest car manufacturer in the U.S. and owns brands like Chrysler, Jeep, Dodge, and Ram Trucks. They also had to pay heavy tariffs to bring in cars and parts, a total of $357 billion in the second quarter of the year.
One of the ways that Stellantis has avoided the new tariffs is through production pauses. These pauses result in plants being shut down for periods. According to sources, Stellantis has shipped 6% fewer cars to dealers than at this point last year.
The Auto Manufacturers Aren’t Passing the Costs Along to Customers Yet
While both GM and Stellantis have been hurt by the tariffs, both manufacturers say they are currently eating the cost rather than raising prices and passing the charges onto customers.
This is helpful to Donald Trump right now, as the president has said in the past that larger companies should avoid raising prices. According to Kelley Blue Book, car prices are only up about 1.2% from last year. This is a lower percentage raise, year to year, than usual.
Companies Won’t Likely Eat the Costs Forever
GM has put on a brave face and said that despite the tough second quarter, the company is maintaining its profit guidance for the year. But both GM and Stellantis have to remain nimble at this point to avoid financial catastrophe.
Every American car manufacturer would love to produce all of its products in the United States, but the worry is that it will result in cars that cost more than the American consumer is willing to pay. And as the carmakers continue to lose profit because of Trump’s tariffs, it is more likely that they will have to dramatically raise their prices.
Conclusion
It is a positive for president Trump that prices have yet to see massive increases in the auto industry, but the GM news is a blow to the president. It shows that American companies are being taxed for making things overseas and will pass them off to their consumers when eating the costs becomes untenable.
Trump has recently cut a new trade deal with Japan and will continue to attempt to make deals with other countries. Whether these deals benefit Stellantis and GM remains to be seen.