GM’s $1.1 billion tariff hit bolsters mounting evidence that Americans are the ones footing the bill for Trump’s import taxes

GM reported a 2% dip in sales to $47 billion, as well as $1.9 billion in quarterly profits, compared to $2.9 billion in the same period last year.

Anticipating the impact of President Donald Trump’s auto tariff policy—which outlined a 25% levy for many imported vehicles—GM withdrew its annual guidance last quarter, predicting an up to $5 billion pummelling from the levies. The company announced last month plans to invest $4 billion in domestic manufacturing plants in order to offset the cost of imports, as well as increase production capacity. Still, GM’s reliance on compact cars made in South Korea has made it vulnerable to the levies.

“In addition to our strong underlying operating performance, we are positioning the business for a profitable, long-term future as we adapt to new trade and tax policies, and a rapidly evolving tech landscape,” CEO Mary Barra wrote in a letter to shareholders on Tuesday.

GM’s rival Stellantis, which owns Jeep and Ram Trucks among other brands, announced on Monday $2.7 billion in net losses for the first half of the year as North American sales continued to slump. Those struggles were exacerbated by the “early effects of U.S. tariffs,” according to Stellantis, which had a more than $350 million negative impact on the company.

America is eating tariff costs

The auto companies’ tariff hit reinforced concerns—and emerging evidence—that Americans are the ones footing the bill for Trump’s sweeping tariff policy. 

Despite the U.S. Treasury collecting a record-setting $100 billion in customs duties so far this year, there has not been a meaningful reduction in the price of imported goods indicating exporters absorbing increased costs on their ends, according to a Deutsche Bank analyst note published on Monday. Instead, import prices have remained steady through June.

“The top-down macroevidence seems clear: Americans are mostly paying for the tariffs,” Deutsche Bank analyst George Saravelos said in the note.

Saravelos posited that because the Consumer Price Index has so far indicated only modest levels of inflation, “it follows that American importers are mostly absorbing the tariffs into their profit margins.”

The phenomenon is exemplified by Stellantis and GM eating billions in tariff costs.

Auto tariffs are no exception

Bernstein senior analyst Daniel Roeska said auto companies have started to exhaust their strategy of absorbing tariff costs into their own margins as car prices are poised to skyrocket later this year.

“There are only two people who can pay for [tariffs]: either the shareholders or the consumer,” Roeska told Fortune. “And in the end, there’s going to be some sharing between those two halves. And so our view has been and continues to be that prices for cars are going to push up in the second half.”

There’s already indications American consumers will be the next to take the tariff punch. Car companies are beginning to roll back discounts and incentives implemented months earlier to boost sales, as evidenced by Ford Motors switching away from its employee discount plan for prospective buyers in favor of a $0 down and 0% interest or financing plan. While GM’s plan to move some manufacturing to the U.S. will help the company save on tariff and transport costs, it will also incur steeper labor costs. The strategic move is a good one, according to Roeska, but it illustrates that companies will largely encounter trade offs when it comes to managing the inevitable impacts of tariffs.

“There’s not much you can do,” Roeska said. “If the policy is to put tariffs on cars, then that will increase the cost of cars, and ultimately, that will likely increase the price of cars.”