Tariffs cost GM $1.1 billion in the second quarter

General Motors' second-quarter profit was cut by $1.1 billion by tariffs on U.S. auto imports, but the automaker still beat analysts' expectations for the period on Tuesday, thanks to strong sales of its core gasoline-powered trucks and SUVs.

The largest U.S. automaker by sales said it expects the impact of tariffs to worsen in the third quarter and maintained a previous estimate that trade difficulties will hit its bottom line by $4 billion to $5 billion this year.

The automaker's revenue in the quarter ended June 30 fell nearly 2% to approximately $47 billion, compared to a year earlier.

GM was one of the companies that revised its annual guidance due to the impact of U.S. President Donald Trump's tariffs, reducing it to an annual adjusted core profit of between $10 billion and $12.5 billion.

Beyond the tariffs, GM's underlying business was strong during the quarter. Sales in the U.S. market, its main source of profit, increased 7%, while the company maintained solid pricing for its pickup trucks and SUVs.

GM returned to profit in China, after losing money there the previous year. Analysts said GM may need to cut investment in future projects or find other ways to reduce spending to offset the impact of the tariffs.

So far, the automaker has maintained stable prices and absorbed the additional costs of the tariffs rather than passing them on to customers.

GM has taken several steps in recent months to bolster its combustion engine operations through increased investment in its U.S. plants, calling into question its goal of ending production of gasoline-powered cars and trucks by 2035.

“Despite the slowing growth of the electric vehicle industry, we believe the long-term future is profitable electric vehicle production, and this remains our focus,” GM Chief Executive Mary Barra told analysts Tuesday.

GM announced in June that it would invest $4 billion in three U.S. plants in Michigan, Kansas, and Tennessee, including a plan to move production of the Cadillac Escalade and increase production of its two full-size pickup trucks.

It said it would add production of its Chevy Blazer, previously produced in Mexico, to the Tennessee plant.

The automaker imports about half of the vehicles it sells in the United States, primarily from Mexico and South Korea. Its domestic rival, Ford, whose quarterly results are due next week, produces about 80% of the vehicles it sells in the United States. (With information from Reuters).