U.S. Car Sales Are Struggling To Overcome Trump’s Tariffs

Good morning! It’s Friday, June 27, 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 hurting the automotive industry and how Toyota seems to be staying above all of that noise. We’re also talking about a group are dealerships that want Republicans to keep EV tax credits around and the total cost of that car transport ship that sunk in the Pacific.

It’s been a rough few months for the U.S. auto industry, thanks mostly to tariffs put in place by President Donald Trump that have severely hurt affordability for vehicles that were already extremely expensive.

Second quarter deliveries are expected to only rise between 1.7 and 2% over the same time last year. That sounds OK, right? Well, it’s not that simple. Most of the gains came early in the quarter when customers were rushing to showrooms to buy cars before tariff-related price hikes took hold. It’s expected that between April and May about 173,000 extra vehicles were sold as shoppers tried to get ahead of tariffs.

Because of that, June sales are expected to be the worst of the quarter. We could end up seeing a 6% decline over the same time last year, and that’s when a major dealership software outage stymied sales. From Automotive News:

Cox expects second-quarter sales of 4.18 million vehicles, up 1.7 percent from the same period a year ago. It predicts a second-quarter SAAR of 16.1 million, slower than the first-quarter rate of 16.4 million.

Edmunds expects a 2 percent second-quarter sales bump.

Both predict big gains for major automakers including Ford Motor Co., General Motors, Toyota and Hyundai.

[…]

Stellantis, Volkswagen and Tesla are expected to see double-digit sales declines, Cox said.

Ford’s employee-pricing discounts are expected to help the company to the biggest market share bump among all automakers, Edmunds said, with an 11.6 percent gain over the first quarter and a 14.8 percent increase from the same period a year ago.

Despite the fact that buyers could face higher transaction prices as the year goes on, they were largely spared in the second quarter. The average new-vehicle retail sales transaction price in June is expected to reach $46,233 — up $1,400 (or 3.1%) from the same time last year. However, it’s only up $77 from May.

Even though these gains are extremely modest over last year’s numbers, I really wouldn’t expect them to get any better as 2025 continues and tariffs kick into high gear.

Toyota cannot stop winning. The Japanese automaker posted its third straight monthly record sales in May thanks to strong demand for hybrids in the U.S., Japan, and China. This, of course, is happening as other automakers lock in for big losses thanks to President Trump’s imported vehicle tariffs.

Toyota’s global sales (including Diahatsu and Hino) reached 955,532 vehicles in May alone. That’s an 8% jump from just a year earlier. That is a gargantuan number of vehicles to sell in just one month. Production was also strong at 906,984 units. Toyota and Lexus ended up with sales up 4% in Japan, 7% in China, and 11% in North America. Not too shabby.

As an added bonus for Toyota’s dominance, it blew Honda and Nissan out of the water. Honda’s global sales were down 4% year-over-year in May to 298,167 vehicles. Nissan fared even worse, selling 256,159 vehicles in May. That’s a 6% drop from last year.

Still, Toyota isn’t impervious to tariffs. From Bloomberg:

The world’s biggest carmaker will raise the prices next month of some vehicles it sells in the US by more than $200, as part of a regular revision based on factors that include market conditions and competition, a spokesperson said last week.

The move came after Mitsubishi Motors Corp. announced it was hiking US prices for three models. Major automakers have been scrambling to minimize the fallout of the trade war between the US and China.

[…]

Toyota said in May that it was expecting a ¥180 billion ($1.2 billion) hit from tariffs in April and May alone. Nissan Motor Co. and Honda Motor Co. both forecast a $3 billion impact, while Subaru Corp. and Mazda Motor Corp. withheld their annual profit guidance for the fiscal year ending March 2026.

Earlier this week, Japan’s chief trade negotiator said the country cannot accept Trump’s 25% auto tariffs. Currently, Japanese automakers build about 3.3 million vehicles in the U.S. every year — more than the 1.37 million vehicles that are shipped here.

Carvana and CarMax are among a group of auto retailers that are urging the U.S. Senate to keep electric vehicle incentives in the budget bill they’re currently hashing out. The group says that abruptly killing the tax credits for EVs would threaten dealerships that have invested heavily in EV sales and service. From Automotive News:

“Dealerships like ours have invested billions of dollars as small businesses to serve our communities, to improve EV education, and offer exceptional service,” dealers said in the June 26 letter. “We need a stable and consistent market for our dealerships to plan, invest, and grow.”

The dealers said tax credits for new and used clean vehicles, the Advanced Manufacturing Production Tax Credit meant to incentivize battery production, the Alternative Fuel Vehicle Refueling Property Credit and others “must continue, even in a reduced form, for at least the next several years.”

The retailers also oppose the annual $250 EV and $100 hybrid registration fee proposed by House Republicans.

“EV drivers would be paying disproportionately and discouragingly high taxes under such a proposal,” they said in the letter. The Senate committee proposal did not include the EV and hybrid registration fees.

They also said that these EV discounts help working- and middle-class car buyers purchase EVs. Unfortunately for them, those aren’t groups Republicans seem particularly interested in protecting with this new raft of financial reform. All in all, 19 dealerships, dealership groups, and five other EV stakeholders signed the letter as of the afternoon of June 26.

The group is working against the clock right now. It’s not totally clear when the Republicans’ budget bill will actually pass, but if it does with the death of EV incentives intact, it won’t take long for them to go away. The Senate bill would eliminate the $7,500 EV tax credit 180 days after passage. The House’s version of the bill would end credits at the end of 2025.

The cargo ship carrying 3,048 Chinese vehicles that caught fire and sank earlier this month is going to cost shippers and the industry about $560 million, according to Anderson Economic Group, and that’s on the low end. 

The cars were on their way to Mexico when the fire broke out. Smoke was initially seen coming from the ship’s deck. Below that were about 750 hybrids and electric vehicles from several Chinese automakers. Right now, it’s still not clear how the fire started. From Automotive News:

The estimate doesn’t include downstream business losses, medical costs, the replacement of the ship or an environmental remediation plan, CEO Patrick Anderson told Automotive News.

“This is a huge cost, and another blaring warning claxon to the industry about the risks of shipping EVs in closed containers,” Anderson said.

This is the third EV-carrying ship to sink or be severely damaged in just the last three years. Now, Morning Midas joins the dubious likes of the Felicity Ace, which sank in February of 2022 and the Fremantle, which was badly damaged in July of 2023.

History.com

Head over to History.com to learn more about Route 66 and why it was decertified.  

This is your sign to drop what you’re doing and see “F1: The Movie” as soon as you can. Is it perfect? No. Are the events of the movie even plausible? No. But, is it sick as hell? You bet it is.