GM extends losses as tariff headwinds eclipse Q2 results, executive assurances

Shares of General Motors (NYSE:GM) continued to lose traction at Tuesday’s open and are currently the worst performing stock in the S&P 500 as the carmaker’s better-than-feared second quarter results were overshadowed by the persistent threat of tariffs on GM’s (NYSE:GM) bottom-line.

Despite mitigation efforts – including a $4B investment in U.S. manufacturing – CFO Paul Jacobson warned that tariff headwinds will accelerate in the second half of the year, forecasting a $4B to $5B cost in FY25 as imports from Canada, Mexico, and Korea will continue to avoid delivery interruptions.

“We are making solid progress on our mitigation efforts and remain on track to offset at least 30% of this impact,” Jacobson said on the company’s earnings call with analysts this morning, adding that GM is “looking for things to normalize around these trade deals that will get done.”

Despite assurances by CEO Mary Barra that strategic and proactive efforts to increase U.S. manufacturing will “further differentiate [GM] from competitors, increase resiliency, and drive overall profitability,” the shares continued to lose ground during the company’s earnings call as the tariff cost continued to weigh.

For the reported quarter, GM (NYSE:GM) acknowledged a $1.1B hit to its core profit as a result of tariffs, and 300 basis point erosion in EBIT margin of 6.1%. This contributed to expectations for a profit of $8.25 to $10 per share in FY25, with the midpoint of $9.125 below the $9.25 consensus estimate.

Warranty costs also weighed on GM’s otherwise strong performance, rising by $300 million in the second quarter compared to a year ago.

The main factor behind higher warranty expenses relate to the GM L87 and software issues on early EV launches.

Despite Jacobson’s assurances that the company is “not happy with warranty trends,” and Barra’s efforts to navigate the ever-changing trade environment, the likelihood that tariffs will impact the second half of the year more than the first half left investors more focused on external risks than executive confidence.

Accordingly, shares shed as much as 8% on Tuesday, resulting in GM’s (NYSE:GM) worst performance since March.