European automakers will pocket between 500-600 million euros per month starting August 1, thanks to a new trade agreement that lowers import tax on vehicles.
The transaction will lower tariffs on most EU products to 15%, after the Trump government announced Thursday that it will reduce tariffs on most EU products to 15% after the Trump government announced new rules that tell federal registrants what to charge customs workers. This shows a significant drop from the previous percentage of 27.5% that Trump previously set.
According to the European Commission’s proposal for the deal, lower fees provide much needed help to EU car manufacturers and stand as the main benefit of the contract.
As the contract works backwards on August 1, Sefcovic explained that the car manufacturer should reclaim the additional money it paid in customs duties from that day. Before meeting with Southeast Asian trade officials in Kuala Lumpur, Malaysia, he said the monthly refund would range from around 500 million to 600 million euros.
Even if it was cut, the 15% rate is far higher than the ones that companies paid before Trump took office. For this reason, business groups and some members of the European Parliament are opposed to trade agreements.
Sefcovic said most EU countries support the agreement and after sharing detailed information on its terms, it predicted lawmakers would support it. He called it “the best deal available” after tough negotiations with Trump administration officials, adding that “other alternatives would be much worse.” During discussions, Trump threatened to charge even more steep fees.
Japanese car manufacturers are struggling to adapt to new tariffs
Meanwhile, Japanese automakers are fighting what industry leaders now call the “new normal” of higher US import taxes. Top executives of major automotive companies expressed visible concerns when discussing the situation, saying that sudden US tariffs are likely to stick even after the Trump administration ends. The executive noted that companies cannot simply raise prices to cover additional costs.
Comments came in August as the automaker released its financial results from June to June 2025. The 25% surcharge, which President Trump introduced a 25% surcharge for automobiles and parts during April, has become more difficult than businesses had expected.
For three months, Nissan and Mazda both reported losing money overall. Nissan handles declining sales, while Mazda relies heavily on shipping cars to the US. Mitsubishi Motors’ most of its revenue disappeared, and Honda’s revenue fell by half. Toyota and Subaru saw profits drop by more than 30%.
From April to June, the automotive companies attempted several ways to handle customs expenses. They reduced the prices of cars shipped from Japan, absorbing some of the financial hits in the US sales business. The company also helped cover additional costs for parts suppliers.
The damage has proven particularly severe for Mazda and Subaru, as sales in the US account for a large part of the business and rely heavily on vehicles exported from Japan. Industry-wide estimates announced by the automaker in early August showed that operating profit losses for the April-June period reached 2.6 trillion yen. These calculations assume that tariffs will decrease to 15% from August 1, based on bilateral transactions in July. This means that the actual impact could be even worse.
In September, Trump signed an order to reduce tariffs on cars from Japan to 15% in exchange for major Japanese investments in the United States. Despite this improvement, rates remain high, and Japanese automakers still face a significant financial burden from their trade policy.
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