At a Glance

  • General Motors executives emphasized that trade agreements between Canada, Mexico, and South Korea are crucial to its outlook. The company's CFO, Paul Jacobson, called the current tariff environment "volatile" and reported a net tariff impact of $1.1 billion for the second quarter (ending June 30).
  • Jacobson said on the company's second-quarter earnings call on Tuesday that the impact was slightly lower than expected, so related costs are expected to rise slightly in the next quarter. GM continues to import vehicles from South Korea, which CEO Mary Barra described as "margin-positive and in high market demand."
  • "We're not going to speculate on future tariff rates, but it's possible and likely that final tariff rates could settle at lower levels, reducing the impact," Jacobson said regarding agreements with these three countries.

Deep Dive

GM is one of many automakers seeking to mitigate the impact of tariff uncertainty. Currently, the Trump administration is continuing to push trade wars with major trading partners. This includes back-and-forth disputes with Canada and Mexico over steel import tariffs, which the U.S. raised to 50% in May, as previously reported by Supply Chain Dive, a sister publication of CFO Dive.

The Trump administration recently negotiated a new trade framework with Indonesia and reached tariff agreement terms with Japan, imposing a 15% tariff on imports from Japan, including automobiles and auto parts, Supply Chain Dive reported.

South Korea, a major exporter of semiconductors, automobiles, and smartphones, plans to hold high-level talks with the U.S. on July 25 to reach a compromise, Bloomberg reported. The talks are scheduled before August 1, when the U.S. plans to impose 25% tariffs on key imports. Last year, exports accounted for 40% of South Korea's GDP.

Jacobson said Tuesday that tariffs on South Korean imports would account for a significant portion of GM's overall 2025 trade impact forecast. In response to an analyst's question, he revealed that the company expects the total impact of import tariffs in 2025 to be between $4 billion and $5 billion, with about $2 billion involving South Korea.

GM is taking steps to mitigate some of the disruption, including "short-term shifts" of some production to the U.S., Barra said in response to questions. Jacobson said the company expects to mitigate about 30% of the estimated total tariff impact through strategic actions such as "manufacturing adjustments, targeted cost initiatives, and consistent pricing."

"Over time, we still believe that as bilateral trade agreements emerge and our sourcing and production adjustments are implemented, our total tariff expenses will decline," Jacobson said.

Despite GM continuing to navigate tariff uncertainty and other challenges—such as increased competition leading to softer fleet pricing in the quarter, according to its earnings report—the company's brands also achieved strong growth, driving record first-half revenue of $91 billion.

GM's electric vehicle demand has been particularly strong: second-quarter EV sales rose 111% year-over-year, capturing 16% of the U.S. EV market, according to its earnings presentation. Chevrolet EVs—currently ranked second in U.S. sales—grew 146% year-over-year in the quarter.

"I want to be clear that our EV journey is about giving consumers choice. Over the past few years, more and more consumers have chosen EVs," Jacobson said of GM's EV lineup, noting the company sees "significant growth potential." With the company having built a "strong" EV portfolio, "our investment focus has shifted to reducing costs and improving profitability," he said.

These results come as the broader EV market still faces its own challenges. For example, the $7,500 EV tax credit for buyers, part of the massive tax and spending bill recently signed by President Donald Trump, will end in September, which could cause prices for such vehicles to surge and weaken demand, CNBC reported.

"While we are still seeking further clarification on certain aspects, we expect these changes to have minimal impact on our 2025 results," Jacobson said regarding EV regulations.