Building Cars In America Doesn’t Stop Automakers From Feeling The Tariff Hits

Happy Tuesday! It’s August 5, 2025, and this is The Morning Shift — your daily roundup of the top automotive headlines from around the world, in one place. This is where you’ll find the most important stories that are shaping the way Americans drive and get around.

In this morning’s edition, we’re looking at how tariffs are hitting made-in-America cars, as well as their effects on Japanese imports. We’ll also look at Tesla’s continuing decay in Europe, and Rivian’s direct sales efforts in Ohio. 

Ford builds its cars here, the way the Trump administration’s tariffs are meant to encourage. You’d think this would mean the company saves money on tariffs, but you’d be wrong — Ford shells out plenty for taxes on the materials and parts it brings in from abroad. From the Wall Street Journal:

Ford Motor, the second-largest American carmaker, prides itself on making most of its vehicles in the U.S. Some 80% of the cars Ford sells in the U.S. are built there, and it makes more vehicles in the U.S. than any other automaker.

But the Dearborn, Mich., company said the Trump administration’s latest trade deals with Japan, the European Union and South Korea put it at a disadvantage with foreign rivals. Those deals now set a 15% tariff rate, which is lower than the 25% auto tariff that went into effect this spring.

Ford faces steeper tariffs on many parts as well as higher costs for imported aluminum, which is subject to 50% duties. Ford, one of the industry’s biggest users of aluminum, buys the material from U.S. suppliers who pass on a chunk of their tariff costs.

The only way to dodge tariffs is to mine all your raw materials in the United States, and to undergo every step of the process between “ore” and “Mustang” within our borders — oh, and only using tooling and machinery that, too, is built in the States. Which itself must be built with machinery made here. You see the issue. 

While American automakers are struggling under the Trump administration’s tariffs, though, foreign automakers are… also struggling. Honda and Toyota are expected to report weak numbers this week, and things may get worse before they get better. From Reuters:

Toyota Motor and Honda Motor are expected to report weaker first-quarter earnings this week, as U.S. import tariffs and a stronger yen weigh on profits despite solid demand for hybrids in their biggest overseas markets.

Japanese automakers face growing uncertainty in the U.S., where tariffs on imports are pushing up vehicle prices and testing the resilience of consumer demand. Investors will be watching for clues on how Japan’s two largest automakers are offsetting such burdens.

Toyota, the world’s top-selling automaker, is forecast to post a 31% year-on-year drop in operating profit to 902 billion ($6.14 billion) yen on Thursday, according to the average estimate of seven analysts polled by LSEG. That would mark its weakest quarterly result in more than two years.

Honda is expected to report a 36% decline in operating profit to 311.7 billion yen on Wednesday, its second straight quarterly drop. The automaker has already forecast a 59% fall in full-year profit.

That mention of “testing the resilience of consumer demand” is a big one. Tariffs have raised car prices across the board, and the U.S. government is working overtime to hide data on how broke and unemployed Americans really are. If prices can’t drop, and consumers can’t afford the product, don’t expect sales to rise. 

Tesla, the company that once built electric cars for Leonardo DiCaprio and now makes mediocre diner food for guys who are afraid of seed oils, is having a bad time. Its sales have Autopiloted off a cliff, with many would-be buyers crediting CEO Elon Musk’s hard right political pivot for their sudden lack of interest in funding his whims via a car company. The numbers show they’re not alone. From Bloomberg:

Tesla Inc. continues to post steep sales declines in Europe’s biggest electric vehicle markets, where the Elon Musk-led automaker is ceding significant share to China’s BYD Co.

In both Germany and the UK — by far the two leading countries for battery-electric vehicle registrations in Europe — Tesla’s July sales fell by more than half compared with a year ago, according to figures reported Tuesday. BYD, by contrast, more than quadrupled registrations in each country.

Last week, the national auto association for France — the No. 3 market in Europe by EV sales — reported that Tesla’s registrations dropped 27% in July and were down almost 40% through the first seven months of the year.

Now I’m just a humble automotive journalist with a degree in business, but I would call these trends “bad.” Perhaps even “concerning” if the company has any interest in continuing to make cars. 

Ohio bans direct sales of cars, unless your car comes from Tesla. Rivian, a company that is notably not Tesla, has some issues with this. Now, it’s bringing those issues to court. From Automotive News:

Rivian has sued Ohio over a 2014 law that blocks the electric vehicle maker from selling directly to consumers, citing a special exemption granted to Tesla, a key rival.

In a lawsuit filed Aug. 4, Rivian argues the direct-sales ban is unconstitutional and stifles competition by shielding Ohio’s franchised auto dealers from new market entrants.

“The State of Ohio has no legitimate interest in blocking its citizens from purchasing vehicles through a Rivian-owned dealer-license location in Ohio,” the lawsuit said.

“It reduces competition, decreases consumer choice and drives up consumer costs and inconvenience — all of which harm consumers — with literally no countervailing benefit,” the suit said.

I’m inclined to agree with Rivian here. Having worked at a dealer, they’re really not necessary as middlemen in every automotive transaction. 

KEXP has been playing the hell out of this track, and for good reason. It’s a great vibe!