Get Ready For Pricier Japanese Cars

Happy Wednesday! It’s July 23, 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 new tariffs on Japan, as well as Europe’s hopes for similar treatment. We’ll also look at Tesla approaching the two-year mark of sales decline in California, and Chinese brands’ advances in Europe. 

The trade war’s still going, but negotiations with Japan have led to some degree of armistice — a flat 15% tariff, down from the 25% that the Trump administration had threatened. That’s especially good for Japanese carmakers, which faced even higher rates. From Reuters:

U.S. President Donald Trump struck a trade deal with Japan that lowers tariffs on auto imports and spares Tokyo from punishing new levies on other goods in exchange for a $550 billion package of U.S.-bound investment and loans.

It is the most significant of a clutch of agreements that Trump has bagged since unveiling sweeping global levies in April, though like other deals, exact details remained unclear.

Japan’s auto sector, which accounts for more than a quarter of its U.S. exports, will see existing tariffs cut to 15% from levies totaling 27.5% previously. Duties that were due to come into effect on other Japanese goods from August 1 will also be cut to 15% from 25%.

American carmakers are now unhappy that the Japanese tariff is lower than the rates for Canada and Mexico, where the Big Three still do much of their manufacturing. This is really just turning out to be an across-the-board price increase on cars, isn’t it?

Now that Japan has paved the way, European automakers and negotiators are hopeful for a similar deal. Carmaker stocks are up on the continent, perhaps presaging a deal to lower car tariffs — and all tariffs — that we’ll have to pay. From Reuters:

Shares in major European carmakers rose on Wednesday, tracking a steep rally in some of their Asian rivals, after Tokyo struck a trade deal with the United States, fuelling optimism for a similar agreement with Europe.

Shares in Japanese and South Korean automakers surged overnight on news the deal would cut the U.S. tariff on Japanese vehicle imports to 15%, from a proposed 25%.

…

The European Commission is seeking to reach a trade deal outline with the United States ahead of the August 1 deadline set by U.S. President Donald Trump for broad tariff increases.

The tariff deadline may be August 1, but remember that it keeps being pushed back. What do we think the next absolute firm drop-dead date will be? September 1?

California was once Tesla’s home, where the company built its name on the backs of wealthy, green-minded car shoppers. Now that the company’s made a hard-right pivot, though, sales on the west coast are drying up. From Reuters:

Tesla’s electric vehicle registrations in California fell 21.1% in the second quarter, according to industry data, marking the seventh consecutive quarterly drop in the crucial U.S. market.

The automaker’s plunging vehicle registrations come as CEO Elon Musk’s polarizing political activity puts him at odds with the liberal values dominant in the state, which has long been one of Tesla’s key markets.

CEO Elon Musk has made his personal politics no secret in recent years, and Californians are having none of it. As are Europeans. This is going really well for the world’s foremost EV slash robot slash crappy fast food company. 

Car buying in Europe is on the decline, but one sector is still doing well: Chinese manufacturers, whose market share continues to creep ever upwards on the continent. They’re now collectively challenging Mercedes’ market share on its home turf. From Reuters:

Car registrations across Europe declined in June, with a 4.4% year-on-year drop to 1.25 million vehicles, data from Jato Dynamics showed on Wednesday.

While overall demand softened, Chinese automakers continued to gain ground, taking a record market share and squeezing several established European brands, the research data showed.

…

Chinese brands nearly doubled their combined share of the European market to 5.1% in the first half of 2025, just shy of Mercedes-Benz’s 5.2%, the report said.

Considering “Chinese manufacturers” a specific bloc still feels like othering, but it’s likely only a matter of time until individual OEMs are such household names that the practice dies off. 

Now that the tax stamp on suppressors is gone, maybe it’s time for another Dillinger.