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Manufacturing activity definition plunged amid GM's profit concerns

Manufacturing activity decreased sharply, with GM attributing profit losses to Trump tariffs.

July 22, 2025 at 08:46 PM

Manufacturing Activity Sinks 'Sharply' as GM Blames Trump Tariffs for Profit Drop

Manufacturing activity records a steep decline as GM attributes profit losses to tariffs.

Manufacturing activity declines sharply as GM cites impact of Trump tariffs

Recent data indicates a dramatic decline in manufacturing activity, which has fallen significantly as General Motors warns that tariffs imposed by former President Donald Trump are negatively impacting profits. According to the Wall Street Journal, the Fifth District Survey of Manufacturing Activity's index plunged to -20 in July, a stark drop from June's -8. Economists had predicted a modest improvement to -6, making this decline particularly concerning. This index, which evaluates over sixty manufacturing firms in the mid-Atlantic region, suggests that key activities like shipments and new orders continue to contract, remaining in negative territory for five consecutive months. Additionally, GM reported a $3 billion profit loss in the recent quarter, projecting a potential $5 billion drop in the upcoming quarter due to the ongoing effects of tariffs on crucial materials, including steel. Stellantis, the parent company of Jeep, has similarly warned of significant financial losses linked to the tariffs.

Key Takeaways

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Manufacturing activity index dropped to -20, indicating contraction in key areas.

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GM's profits fell by $3 billion this past quarter largely due to tariffs.

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The index has been negative for five straight months, signaling ongoing challenges.

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GM anticipates a potential $5 billion profit drop in the next quarter.

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Stellantis also reported expected losses due to tariffs, amounting to $350 million in H1 2025.

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Tariffs are affecting the costs of essential raw materials, complicating recovery efforts.

"Manufacturers are experiencing a significant contraction in activity due to tariffs."

This quote encapsulates the broad impact tariffs are having on the manufacturing sector.

"We anticipate that third-quarter profits could drop by as much as $5 billion due to these tariffs."

This statement from GM underscores the critical financial implications of current trade policies.

"Tariffs have historically led to higher, rather than lower, prices for consumers."

This observation raises concerns about the contradiction in policy goals of lowering inflation while imposing tariffs.

GM's stark warning about tariffs highlights a broader concern within the manufacturing sector about rising costs and diminishing profits. As companies like GM struggle to adapt to the financial pressures of tariffs, the potential for reduced domestic production and job losses grows. While GM attempts to offset losses by expanding U.S. manufacturing, the high costs of imported materials will likely continue to hinder profitability. This situation raises questions about the sustainability of Trump's tariff policies, which seem at odds with the goal of fostering economic growth.

Highlights

GM warns that tariffs are hurting profits significantly.
Manufacturers face increasing pressure from continued tariff impacts.
The index's plunge reflects deeper issues in the manufacturing sector.
Profit losses raise alarms about the future of U.S. manufacturing.

Potential economic risks linked to ongoing tariff policies

The steep decline in manufacturing activity and GM's profit losses raise concerns about economic stability. Questions about tariff sustainability intensify as manufacturers struggle with rising costs.

The ongoing impact of tariff policies continues to challenge U.S. manufacturers.

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manufacturing economy GM Trump tariffs economy politics manufacturing

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