Global Trade
U.S.–EU Finalize Tariff Deal; J.P. Morgan Sees $41 Billion First-Year Impact
- On August 28, 2025, the United States and the European Union formally executed the verbal agreement reached in Scotland in late July between President Donald Trump and European Commission President Ursula von der Leyen. The deal lowers tariffs on automobiles and other sectors to 15%, easing fears of a broader trade war but introducing significant costs for the auto industry and consumers.
A Patchwork of Global Auto Tariffs
Even with the U.S.–EU deal, global auto tariffs remain uneven:
- EU vehicles and parts: 15%
- Mexico & Canada: 25% on many parts, with USMCA carve-outs
- Japan & South Korea: 15% under trade agreements
- U.K.: 10% under a bilateral deal
This patchwork creates uncertainty. Manufacturers are responding differently: some (like Porsche, BMW, Toyota) are modestly raising MSRP, others (such as Mercedes-Benz, Volkswagen, Audi) are holding off for now.
J.P. Morgan’s forecast: $41 Billion in Year One
According to J.P. Morgan Global Research, the tariff changes will add $41 billion in costs on vehicles and parts in year one, rising to $45 billion in year two and $52 billion in year three. That translates to roughly $2,580 per vehicle in year one, rising to about $3,258 per vehicle by year three.
Who Pays the Price?
J.P. Morgan projects that automakers and consumers will share the burden equally, leading to an anticipated 3% rise in new-vehicle price inflation. With affordability already stretched — average transaction prices have grown 28% since the start of the COVID‐19 pandemic — the added tariff costs could further strain consumers.
Suppliers are expected to be largely reimbursed by automakers for direct tariff costs, but margin compression is likely across the supply chain. As Ryan Brinkman, Head of U.S. Autos & Auto Parts at J.P. Morgan, puts it: “For the most part, we see automakers and consumers paying the year one $41 billion tab.”
Sales Outlook
Despite higher costs, U.S. auto sales have shown resilience. The annualized sales rate moved from 15.3 million units in June to 16.4 million in July, driven in part by pre-buy activity ahead of anticipated upward price adjustments.
Looking ahead, J.P. Morgan forecasts U.S. auto sales will average 15.5 million units annually over the next three years, about 3% below 2024 levels.
While the August 28th U.S.–EU tariff agreement defused imminent trade tensions, its economic effects are likely to be substantial. Automakers, suppliers, and consumers will likely share in new costs. The car rental industry must navigate pricing pressures, supply chain shifts, and cautious demand ahead.
Legislative & Regulatory
Jonathan Morrison Becomes NHTSA Administrator
- On Thursday, September 18, the Senate voted 51–47 to confirm Jonathan Morrison as Administrator of the National Highway Traffic Safety Administration (NHTSA). Morrison previously served as NHTSA’s General Counsel during the first Trump Administration.
DOT, NHTSA Launch Rulemakings to Update Safety Standards for Autonomous Vehicles
- Transportation Secretary Sean P. Duffy announced in September that the National Highway Traffic Safety Administration (NHTSA) is launching three rulemakings to modernize the Federal Motor Vehicle Safety Standards (FMVSS) to account for vehicles with automated driving systems (ADS).
The standards, many written decades ago, were designed for cars with human drivers. They require components such as brake pedals, steering wheels, gear selectors, and windshield wipers — equipment that may not exist in fully autonomous vehicles.
Three FMVSS Rulemakings
As outlined in the federal Spring Unified Agenda of Regulatory and Deregulatory Actions, the agency is pursuing amendments to the following standards:
- FMVSS No. 102: Transmission shift position sequence, starter interlock, and transmission braking effect
- FMVSS No. 103 and FMVSS No. 104: Windshield defrosting, defogging, wiping, and washing systems
- FMVSS No. 108: Lamps, reflective devices, and associated equipment
Each proposed rule is designed to ensure that autonomous vehicles without manual controls can be certified for safe use on U.S. roads, while eliminating outdated requirements that assume a human driver is present.
Part of DOT’s Innovation Agenda
The rulemakings are part of DOT’s Automated Vehicle Framework, a central component of Secretary Duffy’s broader innovation agenda.
“America must lead the way in transportation innovation. If we don’t, our adversaries will fill the void,” said Secretary Duffy. “The rules of the road need to be updated to fit the realities of the 21st century. Our changes will eliminate redundant requirements and bring us closer to a single national standard that spurs innovation and prioritizes safety.”
NHTSA Chief Counsel Peter Simshauser added: “Federal Motor Vehicle Safety Standards were written for vehicles with human drivers and need to be updated for autonomous vehicles. Removing these requirements will reduce costs and enhance safety. NHTSA is committed to supporting the safe development of advanced technologies and advancing a new era of transportation.”
What’s Next
The proposed rules will undergo a public notice-and-comment process, allowing automakers, technology companies, safety advocates, and the public to weigh in. If finalized, these changes would mark a major step toward aligning U.S. safety regulations with the realities of driverless vehicle technology.
In addition, in June, NHTSA issued guidelines to help driverless cars get on the road faster by providing a detailed guidance on how to obtain an exemption and an approach that would let the agency adapt terms of an exemption over time.
DOJ Issues Memo on DEI Programs: What ACRA Members Need to Know
- On July 29, 2025, Attorney General Pam Bondi released a memo titled “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination.” The document clarifies how federal antidiscrimination laws apply to Diversity, Equity, and Inclusion (DEI) programs. The Department of Justice (DOJ) warns that while DEI initiatives may be well-intentioned, they cannot operate in ways that give preferential treatment or use proxies for protected characteristics such as race, sex, or national origin.
Although the guidance is aimed primarily at recipients of federal funding, DOJ cautions that the same legal principles apply broadly to private employers and other organizations subject to federal antidiscrimination laws.
Key Risks Identified
The DOJ memo highlights several DEI practices that could be legally problematic:
- Preferential treatment based on race, sex, or other protected traits.
- Unlawful proxies, such as using terms like “lived experience” or geographic targeting that indirectly serve as demographic preferences.
- Segregation or unequal treatment in programs separated by race or gender.
- Hiring and selection practices that require candidate pools or panels to meet demographic thresholds without legal justification.
In short, programs that appear neutral but result in discriminatory outcomes may face scrutiny.
Implications for Businesses
The DOJ memo signals an intent to increase enforcement against discriminatory practices, including the potential revocation of federal funding. It also places responsibility on entities that subcontract or partner with federal grantees, meaning liability could extend down the supply chain.
While the “best practices” outlined in the memo are non-binding, the legal risks are real: Title VI, Title VII, Title IX, and the Equal Protection Clause all remain fully enforceable.
What This Means for ACRA Members
For rental car companies and allied businesses, the DOJ’s action means it is time to review DEI policies and practices. Areas of focus should include:
- Recruitment and hiring: Ensure that diversity slates or targeted recruiting strategies are not discriminatory in practice.
- Federal funding and contracts: Companies with state or federal contracts should confirm that DEI initiatives align with legal standards to avoid jeopardizing funding.
- Supplier and contractor relationships: Check that vendors and partners are not engaging in practices that could create compliance risks.
- Internal training and documentation: Review policy language and training content, and keep thorough records of decision-making processes to demonstrate compliance.
ACRA encourages its members to consult their attorney to assess what, if any, impact this the new guidance on DEI programs could potential have on their business.
Legal News
Washington Legal Foundation file Amicus brief in ACRA case
- On September 16, 2025, WLF asked the Tenth Circuit to reverse a district court decision and strike down Colorado’s $3-a-day “Congestion Activity Fee” on short-term vehicle rentals as preempted by federal law. In its amicus brief, WLF argues that the fee’s disproportionate burden on airport commerce contravenes the Anti-Head Tax Act’s text, context, and history, all which aim to prevent states from disproportionately targeting airport commerce. The district court’s erroneous construction renders key statutory provisions superfluous and flouts established preemption principles, risking a chilling effect on interstate air travel. WLF urges reversal to restore Congress’s intent and to protect the free flow of air commerce.
8th Circuit Strikes Down DOE’s EV Fuel Economy Rule
- In September, the U.S. Court of Appeals for the 8th Circuit struck down a 2024 Department of Energy (DOE) rule that changed how electric vehicle (EV) fuel economy is calculated, ruling that DOE lacked statutory authority to apply the “fuel content factor” at the heart of the rule.
The Rule at Issue
The Biden-era rule (Reg. 1904-AF47) sought to phase out a multiplier factor used to boost the fuel economy equivalent of EVs under the Corporate Average Fuel Economy (CAFE) program. Known as the “petroleum equivalency factor” (PEF), the metric was last updated in 2000, when electric vehicles were still rare. By removing the multiplier, DOE projected that EVs’ assigned miles-per-gallon equivalent (MPGe) would decline by roughly 65 percent, forcing automakers to sell more EVs to comply with fleetwide standards.
Environmental groups had pushed for the change, arguing the multiplier overstated EV efficiency and pollution benefits. Automakers, represented by the Alliance for Automotive Innovation, defended DOE’s rule in court. A coalition of Republican-led states and the American Free Enterprise Chamber of Commerce challenged it.
The Court’s Ruling
In a unanimous opinion, Judge Duane Benton (George W. Bush appointee), joined by Judges Lavenski Smith (Bush appointee) and Ralph Erickson (Trump appointee), concluded that DOE has no statutory authority to apply a fuel content factor to electric vehicles at all.
Benton noted that while the 1975 law authorizing CAFE standards directs DOE to apply fuel content factors to some alternative fuels — such as ethanol and natural gas — Congress gave no such authority for electricity. The court cited the Supreme Court’s Loper Bright decision, which limits agency deference, in its statutory interpretation.
“The part of DOE’s final rule that preserves and then phases out the fuel content factor is unlawful because the fuel content factor—as currently determined and justified by DOE—lacks statutory authority,” Benton wrote.
The court also faulted DOE for adding a new calculation method in the final rule without properly including it in the proposal, violating the Administrative Procedure Act’s notice-and-comment requirements.
Policy & Industry Implications
Ironically, by vacating the 2024 rule, the court reinstates the 2000 regulation that environmentalists had long criticized — at least until DOE conducts a fresh rulemaking. Without the fuel content factor, EVs will still appear far more efficient than gasoline-powered cars, but plug-in hybrids may become more competitive on paper fuel economy standards.
The decision is the latest setback for Biden-era EV policy. In June, the National Highway Traffic Safety Administration (NHTSA) announced it would exclude EVs when writing new CAFE rules. In July, Congress weakened the program further by eliminating penalties for automakers who fail to comply — raising questions about whether CAFE will remain an effective regulatory tool.
DOE did not immediately comment on the ruling, but legal experts expect the agency will have to initiate a new rulemaking to address the petroleum equivalency factor, likely under greater scrutiny and tighter statutory interpretation.
Truck Makers Sue California Over Clean Truck Deal; Implications for Rental Fleets
- Four of the world’s largest truck and engine manufacturers — Daimler Truck North America (DTNA), Paccar, International Motors, and Volvo Trucks North America (VTNA) — filed a federal lawsuit in August against the California Air Resources Board (CARB), challenging the Clean Truck Partnership (CTP) the companies signed in 2023.
The Lawsuit
In their 71-page complaint, the manufacturers argue the CTP became invalid in June, when President Donald Trump revoked Biden-era Environmental Protection Agency (EPA) waivers that had authorized California’s strict Omnibus and Advanced Clean Trucks (ACT) emissions rules.
Despite those waivers being rescinded, CARB continues to insist that truck OEMs comply with its emissions standards under the CTP, threatening civil sanctions and unfavorable treatment for non-compliance, the companies said.
“CARB cannot use the Clean Truck Partnership as a backdoor to enforce California’s preempted emissions standards,” the manufacturers wrote, adding that the state has not met — and cannot meet — several of its obligations under the 2023 agreement.
The lawsuit targets CARB, its Executive Officer Steven Cliff, and California Governor Gavin Newsom, and seeks an injunction preventing the state from enforcing the deal.
Environmental Advocates Respond
Environmental groups quickly criticized the lawsuit as a reversal of course. Guillermo Ortiz, Senior Clean Vehicles Advocate at the Natural Resources Defense Council (NRDC), said the companies were undermining their own commitments:
“This is a cynical reversal of course. These companies helped negotiate the Clean Truck Partnership to secure regulatory certainty. Now they’re trying to dismantle the very deal they shaped — injecting instability into a market they claim to lead. This is bad faith, plain and simple.” [cite]
Federal Government Joins the Battle
The lawsuit comes amid escalating federal-state tensions. The U.S. Department of Justice has also filed separate complaints against CARB and issued cease-and-desist letters to the truck manufacturers, instructing them to stop complying with California’s emissions standards.
Additionally, the Federal Trade Commission investigated the Clean Truck Partnership for potential antitrust concerns before closing its investigation in August 2025 after the manufacturers disclaimed the agreement.
Broader Implications
The lawsuit is the latest flashpoint in the fight over whether California can continue to set stricter emissions standards than federal rules — a power the state has used for decades to push national policy. A ruling in favor of the truck makers could weaken CARB’s influence and reinforce federal supremacy in vehicle standards.
For the car rental industry, the case raises immediate uncertainty over vehicle development and compliance planning. For the rental sector, the outcome could shape future fleet costs, vehicle availability, and compliance obligations.
What It Means for ACRA Members
Although the lawsuit centers on heavy-duty trucks, its outcome could ripple across the rental car and truck sector:
- Regulatory Uncertainty: If CARB’s authority is curtailed, states aligned with California may lose their ability to enforce stricter emissions rules, creating a patchwork that complicates fleet planning for multi-state operators.
- Vehicle Supply and Pricing: OEMs could slow investment in zero-emission trucks if freed from CARB obligations, potentially affecting supply and costs for rental fleets that need green vehicle options.
- Federal vs. State Standards: A ruling against CARB would shift power back to federal regulators (DOT, NHTSA, and EPA), centralizing vehicle policy but reducing California’s role as a policy driver.
- Compliance Costs: In the short term, rental operators might avoid stricter state requirements. But in the long term, regulatory back-and-forth could increase compliance costs if standards are later reinstated.
Next steps
The case could take months to resolve, but its significance is already clear: the outcome will help determine whether California can continue to shape national truck emissions policy or whether those decisions will revert exclusively to Washington.
California has filed its own lawsuit against the federal government, challenging the validity of the Congressional actions that revoked the EPA waivers.
For ACRA members, the lawsuit is less about immediate operations and more about the trajectory of emissions and vehicle standards nationwide — with direct consequences for fleet availability, pricing, and long-term compliance strategy.
State News
Massachusetts Junk Fees Regulations Take Effect
- Massachusetts businesses must now comply with the nation’s most comprehensive “junk fees” regulations, which took effect September 2, 2025, marking a significant shift in how companies can advertise prices and charge consumers across the Commonwealth.
Massachusetts businesses must now comply with the nation’s most comprehensive “junk fees” regulations, which took effect September 2, 2025, marking a significant shift in how companies can advertise prices and charge consumers across the Commonwealth.
The sweeping regulations, announced by Attorney General Andrea Joy Campbell earlier this year, require businesses to disclose the total cost of products and services upfront, eliminate hidden fees, and make it easier for consumers to cancel subscriptions and trial offers.
What’s Changed for Businesses
Under the new rules, companies operating in Massachusetts—including online and out-of-state businesses selling to Bay State consumers—must now:
Display Total Pricing Upfront: Businesses must clearly show the complete price of a product, including all mandatory charges and fees, from the moment pricing information is first presented to consumers. This must happen before collecting any personal information from customers.
Make Pricing Prominent: The total price must be displayed more prominently than other pricing details, ensuring consumers immediately understand what they’ll actually pay.
Explain All Fees: Companies must detail the nature, purpose, and amount of any additional charges. Optional fees must be clearly labeled as such, with instructions on how to avoid them.
Enable Easy Cancellations: Subscription services and trial offers must provide simple cancellation processes, ending the practice of making sign-ups easy while cancellations difficult.
Broad Industry Impact
The regulations apply across all sectors, from restaurants adding service fees to streaming platforms offering free trials. Unlike the Federal Trade Commission’s more limited junk fees rule that targets only hospitality and live events, Massachusetts’ approach covers every industry doing business in the state.
“Today, as we build upon the Commonwealth’s nation-leading legacy of consumer protection, we make clear that ‘junk fees’ and deceptive pricing are not lawful,” Campbell said in a statement marking the regulations’ effective date.
Business Resources and Compliance
To help companies adapt, the Massachusetts Attorney General’s Office (AGO) has published comprehensive guidance, hosted webinars, and created industry-specific resources. Restaurant owners can access specialized “Tips for Restaurants,” while all businesses can find detailed compliance information at mass.gov/ago/junkfees.
The complete regulations, codified as 940 CMR 38.00, outline specific requirements and include some limited exemptions for businesses already subject to comparable federal or state consumer protection rules.
Enforcement and Consumer Rights
Massachusetts consumers who encounter potential violations can file complaints through the AGO’s online portal or call the Consumer Hotline at 617-727-8400. The Attorney General’s Office has indicated it stands ready to enforce the new rules from day one.
The regulations position Massachusetts as a national leader in consumer protection, going further than most states in addressing pricing transparency and subscription practices that have frustrated consumers for years.
National Implications
As other states consider similar legislation, Massachusetts’ comprehensive approach may serve as a model for nationwide consumer protection efforts. Arizona, Colorado, Connecticut, Florida, Hawaii, Illinois, Maine, Oklahoma, Oregon, Rhode Island, and Washington all introduced similar bills in 2025.
The timing coincides with broader federal and state efforts to address corporate practices that allegedly add unexpected costs to consumer purchases, from concert tickets to hotel stays to everyday services.
For more information about the regulations and business compliance requirements, visit the Massachusetts Attorney General’s junk fees resource page.