Automakers to gain $700M relief after US tariff reduction

Automakers from Europe will pocket between 500 and 600 million euros each month starting from August 1st, thanks to a new trade agreement that lowered U.S. import taxes on their vehicles.

The European Union’s lead trade official, Maros Sefcovic, announced Thursday that the deal brings down tariffs to 15% on most EU products after the Trump government published new rules in the Federal Register telling customs workers what to charge. This marks a big drop from the previous rate of 27.5% that Trump had set earlier.

The lower fees provide much-needed help to EU car manufacturers and stand as the main benefit of the agreement, according to European Commission President Ursula von der Leyen’s presentation of the deal.

Since the agreement works backward to August 1st, Sefcovic explained that automakers should get back the extra money they paid in tariffs from that date forward. Speaking before meeting with trade officials from Southeast Asia in Kuala Lumpur, Malaysia, he said the monthly refunds would amount to roughly 500 to 600 million euros.

Even with the reduction, the 15% rate stays well above what companies paid before Trump took office, when tariffs typically sat in single-digit ranges. Business groups and some European Parliament members have spoken out against the trade deal because of this.

Sefcovic said most EU countries backed the agreement and predicted that lawmakers would also support it after he shared detailed information about its terms. He called it “the best deal available” following tough negotiations with Trump administration officials, adding that “any other alternative would be much worse.” During talks, Trump had threatened to impose even steeper rates.

Japan’s automakers are struggling to adapt to new tariffs

Meanwhile, Japanese automakers continue struggling with what industry leaders now call the “new normal” of higher U.S. import taxes. One top executive at a major car company showed visible concern when discussing the situation, saying it seems likely that America’s steep tariffs will stick around even after the Trump administration ends. The executive noted that companies cannot simply raise prices to cover the added costs.

The comments came in August as automakers released their financial results for April through June period of 2025. The 25% extra tariffs that President Trump put in place during April on cars and car parts hit the industry harder than companies had expected.

For the three-month period, Nissan and Mazda both reported losing money overall. Nissan has been dealing with poor sales numbers, while Mazda depends heavily on shipping cars to the United States. Mitsubishi Motors saw most of its income disappear, and Honda’s earnings fell by half. Toyota and Subaru watched their profits drop by more than 30%.

During the April to June months, car companies tried several ways to handle the tariff costs. They cut the prices of cars shipped from Japan and made their U.S. sales operations absorb some of the financial hit. Companies also helped cover extra costs for parts suppliers.

The damage proved especially harsh for Mazda and Subaru, since U.S. sales make up a large chunk of their business and they rely heavily on exporting vehicles from Japan. Industry-wide estimates released by automakers in early August showed the total effect reached ¥2.6 trillion in lost operating profits for the April-June period. These calculations assumed tariffs would drop to 15% starting August 1st based on the July bilateral deal, meaning the actual impact could be even worse.

In September, Trump signed an order reducing tariffs on cars from Japan to 15% in return for major Japanese investment in the United States. Despite this improvement, the rate remains high and Japanese automakers still face a heavy financial burden from the trade policies.

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