Dive Brief:

• General Motors executives highlighted trade deals between Canada, Mexico and South Korea as important to its outlook as it navigates what CFO Paul Jacobson called a “dynamic” tariff environment, with the automaker reporting a $1.1 billion net tariff impact for its second quarter ended June 30.
• The impact was slightly lower than expected, with the Detroit-based automaker anticipating such costs will therefore be slightly higher for its next quarter, Jacobson said Tuesday during the company’s Q2 earnings call. GM has continued to import vehicles from South Korea, as they are “contribution-margin positive and they’re very much in demand,” CEO Mary Barra said.
• “We're not speculating on what those are going to look like going forward, but there is a possibility and a likelihood, if you will, that ultimately a tariff rate gets set at a lower level, which would ultimately bring that impact down,” Jacobson said regarding deals with the three countries.  

Dive Insight:

GM is one of several automakers looking to mitigate the effects from tariff uncertainty as the Trump administration presses on with a trade war involving key trade partners. That includes a back-and-forth between Canada and Mexico regarding levies on steel imports, which the U.S. hiked to 50% in May, CFO Dive sister publication Supply Chain Dive previously reported.

The Trump administration in recent days has negotiated a new trade framework with Indonesia and reached terms for a tariff agreement with Japan, which would set a 15% levy on imports from the country including for cars and auto parts, Supply Chain Dive reported.

South Korea, a critical exporter of semiconductors, automobiles and smartphones, is set to hold high-level talks with the U.S. on July 25 in an attempt to reach a compromise, Bloomberg reported. The talks are scheduled to occur before Aug. 1, when the U.S. plans to impose a 25% tariff on critical imports. Exports made up 40% of South Korea’s gross domestic product last year.

Tariffs on South Korea imports would constitute a significant portion of the overall trade impact GM forecasts for 2025, Jacobson said Tuesday. The company anticipates from $4 billion to $5 billion in gross impact from import duties during 2025, he said in response to analyst questions. The automaker expects roughly $2 billion will involve South Korea.

GM is taking steps to blunt some of the disruption, including making some “short-term shifts” in production to the U.S., Barra said in response to questions. The company expects to be able to mitigate around 30% of its projected gross tariff impact through “strategic actions such as manufacturing adjustments, targeted cost initiatives and consistent pricing,” Jacobson said.

“Over time, we remain confident that our total tariff expense will come down as bilateral trade deals emerge, and our sourcing and production adjustments are implemented,” Jacobson said.

While the automaker continued to handle tariff uncertainty and other challenges — for example, increased competition contributed to moderation for its fleet pricing in the quarter, according to its earnings report — GM also reported strong growth across its brands, contributing to record revenue of $91 billion for the first half of the year.

The automaker saw particularly robust demand for its electric vehicles: Q2 EV sales rose by 111% year-over-year, representing 16% of the U.S. EV market, according to its earnings presentation. Chevrolet EVs — which are now the second top selling such vehicle in the U.S — rose by 146% YoY for the quarter.

“I want to be clear that our EV journey is about giving consumers choice. And over the last few years, a steady number of consumers are choosing electric vehicles,” Jacobson said of GM’s EV offerings, noting the automaker sees “significant growth potential.” With the company having built out a “robust” portfolio of EVs, “our investment focus has turned to driving down costs and improving profitability,” he said.

The results come as the broader EV market continues to face challenges of its own. As part of the massive tax-and-spending bill recently signed into law by President Donald Trump, for example, a $7,500 EV tax credit for purchasers will end in September, which could lead to a spike in prices for such vehicles and undermine demand, CNBC reported.

“While we are still seeking further clarification on certain aspects, we anticipate these changes to have a minimal impact on our 2025 results,” Jacobson said of EV regulations.