GM lifts outlook as Trump hits Canadian autos with 50% tariffs

The news: General Motors raised its full-year profit outlook for the second time this year. The move came a day after the Trump administration imposed a 50% tariff on a range of Canadian goods, including autos, under Section 338 of the Tariff Act of 1930.

The raise was across the board:

Second-quarter revenue was $48 billion, and adjusted earnings came in at $3.57 a share, ahead of the $3.20 analysts expected.

The tariff: The White House order puts a 50% duty on about $20 billion of Canadian imports and takes effect in 30 days. It carves out energy, potash, fish, critical minerals and goods already covered by Section 232 steel and aluminum duties.

It is the first use of Section 338, a 1930 provision that lets the president penalize countries deemed to discriminate against US commerce. It also provides no exemption for goods that qualify under USMCA, so the new duty stacks on top of what automakers already pay.

The exposure: GM builds vehicles in Canada at plants in Ingersoll, Oshawa, and St. Catharines, Ontario. It has already scaled back operations there, ending the BrightDrop electric van line at its CAMI plant and cutting a shift at Oshawa.

That retreat is part of what triggered the tariff. Canada cut GM's duty-free US import quota by 24% last year in response, and the administration cited Canada's quota system as the discrimination Section 338 is meant to address.

The response: In her shareholder letter, CEO Mary Barra said GM plans to move more factory work to the US to lower its tariff exposure, according to the Globe and Mail. The shift, plus higher software spending, is reportedly adding $1 billion to $1.5 billion in costs.

GM has held its full-year tariff estimate at $2.5 billion to $3.5 billion, unchanged since the first quarter.

What's next: The duties take effect next month. GM reports third-quarter results this fall.