It looks like President Donald Trump’s tariffs are making regular Americans and U.S. companies suffer. General Motors Co. was the latest U.S. company to disclose how the levies are raising costs, with the automaker saying Tuesday that the duties dented profits by more than $1 billion as it chose to absorb the blow.
“With little relief on import prices, domestic firms are stomaching the cost of higher tariffs and starting to pass it on to consumers,” Wells Fargo & Co. economists Sarah House and Nicole Cervi said in a note last week. “The recent rise in import prices points to foreign suppliers generally resisting price cuts.”
According to Wells Fargo, for many foreign companies, the slide in the U.S. dollar has incentivized them to raise their invoice prices to compensate.
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NPR reports that in a quarterly earnings call with investors, the chief financial officer of General Motors said Tuesday morning that tariffs cost the company approximately $1.1 billion over three months, bringing the company’s profit margin from 9% down to 6.1% — that is, from meeting their target profitability to falling several percentage points short.
“We’re still tracking to offset at least 30% of the $4 to $5 billion full-year 2025 tariff impact,” CFO Paul Jacobson said, through a combination of changes in manufacturing, “targeted cost initiatives,” and the prices that consumers pay.
Items such as cars, electronics, household appliances, and groceries now carry higher prices due to increased import costs. American companies, especially small and mid-sized businesses, are struggling to absorb these expenses or pass them onto consumers. Manufacturers reliant on foreign parts face disrupted supply chains and rising operational costs, hurting competitiveness. Some firms have delayed investments or moved production offshore to avoid tariff penalties.
Meanwhile, retaliatory tariffs from U.S. trade partners have hurt American exporters, particularly farmers and manufacturers, who now face reduced access to global markets.
Forecasters reportedly doubt whether U.S. corporations will sacrifice profits for much longer. “If consumers and foreign firms are not bearing tariff costs, domestic firms are. That is something that eventually should be reflected in corporate earnings announcements,” Citigroup Inc. Chief U.S. Economist Andrew Hollenhorst said in a note Tuesday. “We will be listening this quarter, but firms may still emphasize uncertainty and (perhaps rightly) expect that the burden sharing can shift in coming months.”
Companies like General Motors are absorbing billions in tariff-related costs, which is squeezing profit margins and forcing difficult decisions about pricing and production. While some firms attempt to offset these impacts through operational changes, many are starting to pass higher costs onto consumers, contributing to rising prices across everyday goods such as cars, electronics, and groceries.
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Small and mid-sized businesses, in particular, face heightened challenges as they grapple with supply chain disruptions and increased expenses. Additionally, retaliatory tariffs from trade partners have curtailed export opportunities, further impacting key sectors like agriculture and manufacturing.
As the tariff war continues, experts expect businesses to increasingly reflect these costs in their earnings, potentially leading to further price hikes or reduced investments, underscoring the widespread economic consequences of prolonged trade tensions.