European Cars Are Back On The Menu, But Prices Will Rise

Happy Monday! It’s July 28, 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 the U.S.’s shiny new trade deal with the EU, as well as how our tariffs have driven poverty among now-former Canadian auto workers. We’ll also look at Audi’s response to the tariffs, and Tesla’s new deal with Samsung.

The United States has been antagonizing its trading partners under the Trump administration, demanding that our allies pay fealty in the form of tariffs on trade. This isn’t how tariffs actually work — American importers pay the tax, no new money enters the country’s economy from other nations — but things work differently in the reality imagined by our President, so we’re sort of stuck with this. Our trading partners have had to essentially watch the social media platform that Trump himself owns to see how much extra their goods will cost on any given day, but now the European Union can rest easy knowing it has a set, safe deal with us. Sort of. From Reuters:

The United States and the European Union agreed on a framework trade deal, which leaders on both sides of the Atlantic said would end months of uncertainty for industries and consumers.

Here are the main elements of the deal that will enter into force on August 1 through an executive order by President Donald Trump, according to EU officials:

* BASELINE TARIFF RATE: Almost all EU goods entering the U.S. will be subject to a 15% baseline tariff. The 15% tariff is not added to any existing rates

* CARS: Cars and car parts will be subject to the 15% tariff, compared to the 27.5% they face now.

Your next European car will likely cost at least 15% more, thanks to these tariffs. Even if you buy a Volkswagen built in the United States, that factory is still paying 15% extra for parts — unless the parts are also made here, in which case someone’s paying an extra 50% for European steel and aluminum. The only way to dodge tariffs is to do everything here, from mining through to a final product, which will itself add costs because mining companies in the States can’t use Dickensian orphans as labor. Well, not yet anyway. Florida’s working on it. Regardless, your next car will cost you more, and there are plenty more parts of the EU trade deal that are pending investigation from the United States. This is fine. 

A major tenet of the Trump administration’s approach to foreign policy is bringing manufacturing jobs back to the United States. This is the sort of idea that sounds really good until you think about it, and realize that Americans don’t actually want to work in manufacturing (and that our entire global economy is built on staggering levels of worker exploitation that you can’t really legally pull off here). But those jobs that Trump wants to bring back have to come from somewhere, and some have come from the auto manufacturing centers of Canada — areas that are now seeing unemployment, poverty, and literal bread lines. From Bloomberg: 

An hour from Toronto, downtown Oshawa seems to exude the vibe of a pleasant small town. But signs of economic stress are multiplying in the place that once fashioned itself as Canada’s motor city.

Lines form early outside the food bank on Simcoe Street where customers load strollers with pasta and bags of bread. Homeless encampments dot the river trail. Inside local food joints like Ciao Amici, a lunch stop serving Italian specialties, conversations drift toward layoffs. On that front, there’s a lot to talk about.

Unemployment has surged in Oshawa and now tops 9%, one of the highest rates of any Canadian city. In May, shortly after US President Donald Trump imposed tariffs on automobiles, General Motors Co. said it planned to reduce output at the only Canadian assembly plant it owns that builds pickup trucks. The move affects some 700 jobs at the factory. Many more people will feel the ripple effects.

This is a factor that companies aren’t likely to consider much when moving production around, beyond changing labor costs and the possibility of union actions over factory closures, but something that the countries negotiating trade deals should keep in mind. The lower they can get U.S. tariffs, the more goods keep flowing from their shores, and the more of their own manufacturing workers stay employed. 

Many European automakers have a fair level of U.S. manufacturing — BMW builds in South Carolina, Mercedes-Benz in Alabama — but Audi isn’t one of them. None of the company’s cars are built in the States, meaning every one will be subject to these new tariffs. That’s not fantastic for yearlong earnings estimates, and Audi is now adjusting its numbers to show how badly the company will be affected. From Reuters:

Audi said it is still assessing the implications of the trade deal reached between the United States and the European Union on Sunday.

The agreement set a 15% baseline U.S. tariff on imports from the EU, including cars, which had previously faced customs duties of 27.5%.

“Should the 15% tariff stay in place long-term, it would still put Audi at a competitive disadvantage, because its key peers have a more pronounced U.S. production footprint,” said Fabio Hoelscher, an analyst from Warburg Research.

This puts Volkswagen Auto Group in an interesting position, because the VW brand does actually have a manufacturing presence in the States. Someone back in Germany is likely running the numbers right now, weighing expected sales numbers against costs and profits to see whether it makes sense to allocate a bit of Chattanooga’s VW production capacity towards its Audi or Porsche platform-mates. I do not envy the person doing that math. 

Tesla is shifting its business from the flailing automaking wing into more diversified revenue streams like bad diners, but the company does still make cars — cars that need chips. Those chips will now come from Samsung’s Texas plant, where Tesla CEO Elon Musk has promised to personally walk the production lines to “accelerate the pace of progress.” Whatever that means. From Automotive News:

Tesla Inc. CEO Elon Musk said the U.S. automaker had signed a $16.5 billion deal to source chips from Samsung Electronics, a move expected to bolster the South Korean tech giant’s loss-making contract manufacturing business.

Samsung’s shares jumped as much as 6.8 percent to their highest since September last year after news of the deal. Tesla shares were up 1.6 percent in U.S. premarket trading.

Musk said Samsung’s new chip factory in Taylor, Texas, will make Tesla’s next-generation AI6 chip, potentially re-energizing the project that has faced long delays amid Samsung’s difficulties in retaining and attracting major clients.

“Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house,” Musk said in a post on X on Monday.

Having your boss literally stand over your shoulder and watch you work is always good for your productivity, right? You always work faster under that kind of micromanagement. Have fun with that, Samsung workers.

That’s right folks, all people born in or naturalized to the U.S. are citizens. Done, settled, next question. 

This one is literally on the radio, as KEXP DJ Eva Walker is on a jazz kick this morning and blessing my ears with some extremely good brass and piano. You all deserve to hear this too.