How Are Tariffs Impacting GM’s Bottom Line in 2025?
It’s no secret that tariffs have become a major thorn in the side of American automakers, but the numbers coming out of General Motors this year are enough to make anyone do a double take. In just the second quarter, GM reported that tariffs cost the company a staggering $1.1 billion. And that’s not the end of it—by year’s end, the total hit could reach as high as $5 billion. For context, that’s more than the annual GDP of some small countries.
These added costs aren’t just accounting headaches. They’re real dollars that ripple through the entire business. GM’s quarterly revenue clocked in at $47.1 billion, but the company’s adjusted EBIT (earnings before interest and taxes) dropped to $3 billion, with executives pointing directly to tariffs as the main culprit for the decrease. The result? Higher sticker prices for consumers and tighter margins for the automaker. It’s a classic case of unintended consequences—tariffs meant to protect U.S. industry are, ironically, squeezing one of its biggest players.
Why Are GM’s Sales Still Strong Despite These Challenges?
Here’s where things get interesting. Even with these financial headwinds, GM’s North American operations are firing on all cylinders. Net revenues in the region hit $39.5 billion, buoyed by record crossover sales and strong demand for trucks. Dealer inventories in the U.S. actually shrank in Q2, hinting at brisk sales and perhaps a bit of pent-up demand.
What’s more, GM managed to keep incentive spending lower than the industry average, and the average transaction price for a new GM vehicle soared above $51,000. That’s a clear sign that customers are still willing to pay premium prices, even as costs rise. According to data from Cox Automotive, the average new car price in the U.S. hovered around $48,000 in early 2025, so GM is outperforming the market on that front.
How Is GM Navigating the Shift to Electric Vehicles?
Electric vehicles are the talk of the industry, and GM is right in the thick of it. The company’s EV sales jumped an eye-popping 111% year-over-year in the second quarter, giving GM a 16% share of the U.S. EV market. Chevrolet, in particular, surged to become the second best-selling EV brand in America, with sales up 146% in Q2. The affordable Equinox EV is a big part of that story—it’s now the third best-selling electric vehicle in the country.
Cadillac is also making waves, claiming the title of best-selling electric luxury brand and ranking as the fifth largest EV brand overall in the U.S. That’s no small feat, especially with competition heating up from both legacy automakers and new entrants.
Still, GM’s leadership isn’t sugarcoating the challenges. CEO Mary Barra recently acknowledged that EV growth is slowing compared to the initial hype. She emphasized that the company remains committed to a profitable electric future, but also noted that internal combustion engine (ICE) vehicles will have a “longer runway” than previously expected. Translation: GM is hedging its bets, keeping its options open as consumer preferences and market realities evolve.
What Do Tariffs Mean for Car Buyers and the Broader Market?
Let’s be real—tariffs don’t just hurt automakers. They eventually trickle down to consumers, often in the form of higher prices. With GM facing billions in extra costs, it’s almost inevitable that some of those expenses will show up on the window sticker. Industry analysts at the Center for Automotive Research estimate that every $1 billion in new tariffs can add roughly $400 to the price of a typical vehicle. Multiply that by GM’s projected tariff bill, and you can see why buyers are feeling the pinch.
There’s also a broader ripple effect. When a giant like GM tightens its belt, suppliers, dealerships, and even local economies can feel the squeeze. It’s a reminder that trade policy isn’t just an abstract debate—it’s something that shapes paychecks, prices, and jobs across the country.
Is GM’s EV Strategy Enough to Weather the Storm?
GM’s approach is all about flexibility. The company is investing heavily in domestic battery production and keeping its manufacturing footprint nimble, ready to pivot as demand shifts. By focusing on both ICE and EV models, GM is trying to avoid putting all its eggs in one basket—a smart move, given the unpredictable pace of the EV transition.
But there are wild cards. The elimination of the clean vehicle credit, for example, could throw a wrench into the works, making EVs less affordable for many buyers. GM’s leadership is watching these policy changes closely, adjusting production plans and marketing strategies on the fly.
What’s the Real Takeaway for the Future of American Automaking?
GM’s latest numbers offer a masterclass in resilience and adaptation. Despite billions in tariff-related costs, the company is finding ways to grow, innovate, and keep customers engaged. The EV surge is real, but so are the challenges of shifting an entire industry’s business model while navigating unpredictable trade winds.
The big takeaway? Navigating tariffs and the EV transition isn’t about perfection—it’s about smarter adjustments. Start with one change this week, and you’ll likely spot the difference by month’s end. Whether you’re a car buyer, an industry insider, or just someone watching from the sidelines, the story unfolding at GM is proof that adaptability—not rigidity—is the real engine of progress.