A 25% tariff on vehicles and auto parts imported into the U.S. has hit automakers amid President Trump's push for global trade partners to reach deals with the U.S. by Aug. 1.

US automakers are reporting notable financial impacts from tariffs imposed by the Trump administration on imported cars and parts. General Motors confirmed a $1.1 billion profit hit in the second quarter, aligning with earlier projections of a $4 to $5 billion annual loss. Stellantis also reported a $2.7 billion loss for the first half of the year. These tariffs have increased import costs and led to reduced car sales, as some consumers purchased vehicles before the tariffs took effect. 

The restructuring of supply chains across North America, following the renegotiation of the USMCA trade deal, has made it difficult for automakers to adapt quickly to the new tariff environment. While companies have attempted to absorb some of the costs through discounts and promotions, economists warn that these losses may eventually be passed on to consumers, potentially affecting inflation rates.

How automakers are being affected by Trump's tariffs

The Trump administration is focused on finalizing tariffs with dozens of nations. The Treasury Secretary says an August deadline may be pushed to finalize some of those agreements. But some sectors are already feeling the impact of those tariffs. CBS News Money Watch correspondent Kelly O'Grady is here. What's up, Kelly? Hey, how's it going? All right. So yesterday you talked about Stellantis. What's going on today? So today we heard from GM. They announced their earnings. And it wasn't worse than expected. Remember, they've been pretty vocal about how these auto sector tariffs, it's a 25% tariff on all imported foreign cars and parts, would impact their bottom line. They had initially said likely a $4 to $5 billion hit throughout the year to their profits. And they affirmed that. They said, look, this is exactly what we are seeing, what we're projecting. And specifically, they announced a $1.1 billion hit to profit in the second quarter. And so what that tells you is there are higher import costs because you have to pay that tariff when that part or that car is coming over the border. But it's also because a lot of consumers bought ahead of those tariff deadlines. You're not having as many cars sold. And so the other thing that I will note is, we mentioned Stellantis yesterday, that was a $2.7 billion hit to the first half of 2025. GM and Stellantis, these are American car companies that are getting hit by this. And you think about that USMCA trade deal, the free trade agreement between Mexico, Canada and the US that was done under the first Trump administration. Trump renegotiated that NAFTA deal. Exactly. That's his deal. That is his deal that he clearly wants to renegotiate when it opens up next year. He's like, whoever did that deal, they're terrible. I've got a better one coming up. But yes. These car companies coming out of that deal reimagined their supply chains to be across North America, Mexico, Canada, the US, and oftentimes apart, will be going across the border multiple times. And so it is very hard for companies like this to just say, OK, there are tariffs, we're going to totally change all of our infrastructure that we have built up over years and years. And you're seeing that reflected in their earnings results. This is something that I don't think gets talked enough about, which is the tariffs may be a way for the way that the president and his advisors are positioning this as a way to ensure that there's a trade balance that they feel is equitable for the United States. But companies are going to feel the squeeze and ultimately consumers are going to feel the squeeze. And they range, and we've talked about this all year long, in products that people aren't even considering. Forget the phones that aren't built here or sneakers, we're talking about just everyday items that may affect people like cars. Yeah, that's right. And I think what GM and these other companies have tried to do is sort of take the hit themselves. You've seen a lot of marketing around, you're going to get employee pricing, you're going to get the same discount that we offer our employees when you come to that car lot. But that's not going to be able to last forever because you see these companies taking these billion dollar profit hits. That's something that will ultimately be passed on to you and me, and that's really what economists are worried about over the next three to six months and how that will impact that overall inflation rate. You know, I collect action figures, Kelly. I did not know that. So when I was a kid, action figures were seven to eight inches tall. They were made with plastic. The OPEC oil crisis put a lot of those companies who put out those world's greatest superhero action figures made by a company called Mego. That company went out of business because of the OPEC oil crisis. In other words, something that had a profound effect on the economy affected something as simple as the toys that I was playing with in the 1970s that I still play with today in 2025. You should bring them to set sometime. They are in my office. Maybe I will. They're right up in my office, Kelly O'Grady. Anybody can hang out with Batman and Superman if they want. Thank you, Kelly. It's always good to see you.

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