General Motors’ profit declined 35% in its second-quarter, including a $1.1 billion hit from tariffs, but the automaker easily topped expectations and stuck by its full-year financial outlook that it lowered in May.

GM CEO Mary Barra also said in a letter to shareholders on Tuesday that the automaker is attempting to “greatly reduce our tariff exposure,” citing $4 billion of new investment in its U.S. assembly plants.

“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,” she said.

Barra said during GM’s conference call that the automaker expects to build more than 2 million vehicles in the U.S. each year as it scales production.

GM said that it’s making solid progress in mitigating at least 30% of the $4 billion to $5 billion gross tariff impact it anticipates for the year through manufacturing adjustments, targeted cost initiatives and with pricing.

The company expects the impact from the Trump administration’s tariffs to take a bigger toll in the third quarter because of indirect costs related to the duties.

Chief Financial Officer Paul Jacobson remained optimistic, however.

“Over time, we remain confident that our total tariff expense will come down as bilateral trade deals emerge and our sourcing and production adjustments are implemented,” he said.

For the three months ended June 30, GM earned $1.89 billion, or $1.91 per share. A year earlier the company earned $2.93 billion, or $2.55 per share.

Stripping out certain items, earnings were $2.53 per share. That handily beat the $2.34 per share analysts polled by FactSet were calling for.

Revenue declined to $47.12 billion from $47.97 billion, but still topped Wall Street’s estimate of $45.84 billion.

Jacobson said that GM dealt with higher warranty expenses during the quarter, which was partly due to increase warranty claims from software issues on some of its early EV launches. Jacobson said GM provided extended warranties as needed and is working to improve supplier quality.

Shares fell nearly 2% before the opening bell on Tuesday.