General Motors is taking a serious financial hit from U.S. tariffs, and one hedge fund manager thinks the numbers have become so extreme, GM might as well start rebadging Toyotas.
“I have to do the math, but I’m pretty sure we’re at the point where GM is financially better off just buying Toyotas directly from Tokyo, changing the logo, and reselling them for 5% higher,” Spencer Hakimian, Founder of Tolou Capital Management, posted on X.
His post came just after GM reported that tariffs took a $1.1 billion bite out of its second-quarter earnings.
The company now expects a total tariff hit of $4 billion to $5 billion for the year.
GM Faces Steep Tariff Costs and Falling Shares
The automaker is getting squeezed on all sides. President Donald Trump’s trade policies are hitting GM with 50% tariffs on steel, aluminum, and copper, along with 25% tariffs on imports from Canada and Mexico.
That’s especially painful considering GM imports about half the vehicles it sells in the U.S., mostly from Mexico and South Korea, Reuters reported.
As a result, shares dropped 8% Tuesday after the company chose to keep its profit forecast unchanged, despite investors hoping for an increase.
Quarterly revenue dipped nearly 2% year-over-year to $47 billion. Adjusted earnings per share fell to $2.53, down from $3.06 a year earlier.
Gas Vehicles Are Back In Focus
While electric vehicle growth has slowed, GM is doubling down on its gas-powered truck and SUV lineup, the segment still bringing in strong profits.
U.S. sales rose 7% in the second quarter, helped by strong pricing on full-size pickups and SUVs. GM even turned a small profit in China after losses a year ago.
To respond to the new realities, the company is investing $4 billion into factories in Michigan, Kansas, and Tennessee, including plans to move some vehicle production back from Mexico.
GM CEO Mary Barra told analysts Tuesday, “Despite slower EV industry growth, we believe the long-term future is profitable electric vehicle production, and this continues to be our north star.”
But with EV tax credits set to expire in September and fines for missing fuel economy targets eliminated under recent legislation, the short-term economics increasingly favor gasoline vehicles.
Looking Ahead
Analysts say GM may need to delay or scale back some future projects to offset the impact of tariffs, especially as it continues absorbing most of the added costs instead of passing them on to buyers.
Meanwhile, GM’s rivals are also feeling the pressure. Stellantis said tariffs cost it €300 million in the first half of 2025, and Ford shares dipped slightly this week.
Hakimian’s sarcastic suggestion may be exaggerated, but it reflects growing frustration from the financial world over how trade policy is reshaping the auto industry’s bottom line.
For now, GM is betting that its core lineup of big trucks and SUVs will keep the engine running, even if electric dreams have to wait a little longer.