Auto makers exported a record $7.4 billion worth of vehicles to China last month, as European and Japanese companies took advantage of a tariff cut that excludes their U.S. counterparts.

The July 1 tariff reduction to 15% from 25% allows lower retail prices, which encouraged foreign manufacturers to ship 165,000 cars into China last month, breaking the previous record of 134,000 set in July 2014, according to customs data.

U.S....