Tesla raises alarm about Trump tariffs despite Musk’s White House role
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Tesla has warned Donald Trump’s trade policies could hurt its business despite the fact boss Elon Musk is a key ally of the US President.
In a letter to US trade representative Jamieson Greer, Tesla said that escalating trade could make it difficult to secure parts at an affordable price. The company also warned it also warned its electric vehicles (EVs) could be hit by tariffs imposed on the US in retaliation for Mr Trump’s trade policies.
The unsigned letter, sent on Tuesday, said that Tesla “supports” fairness in global trade but said US exporters were “exposed to disproportionate impacts when other countries respond to US trade actions”.
Tesla said that “past trade actions by the United States have resulted in immediate reactions by the targeted countries, including increased tariffs on EVs imported into those countries.”
Mr Trump has imposed an additional 20pc tariff on all imports from China, prompting Beijing to respond with levies of its own including on cars. China is Tesla’s second biggest market after the US.
The letter, first reported by the Financial Times, said Tesla was changing its supply chain to find as many local suppliers for its cars and batteries so as to lessen reliance on overseas businesses vulnerable to tariffs.
“None the less,” it warned, “even with aggressive localisation of the supply chain, certain parts and components are difficult or impossible to source within the US”.
The company urged Mr Greer to “ensure that US manufacturers are not unduly burdened by trade actions that could result in the imposition of cost-prohibitive tariffs on necessary components”.
The call for restraint comes despite Tesla boss Mr Musk’s closeness to Mr Trump. The billionaire has been deeply embedded in White House decision-making and been handed a broad mandate by the President to slash Federal government spending.
Mr Musk himself has in the past positioned himself as a supporter of free trade, writing on Twitter in 2018 that “avoiding a trade war will benefit all countries.” He has argued that the UK should have a free-trade agreement with the US involving “no tariffs at all either way”.
However, he has also supported tariffs when it benefits his own company, criticising Barack Obama’s administration for failing to ensuring equality in tariffs with China.
Replying to a tweet from President Trump during his first administration in 2018, he said: “Do you think the US & China should have equal & fair rules for cars? Meaning, same import duties, ownership constraints & other factors. For example, an American car going to China pays 25pc import duty, but a Chinese car coming to the US only pays 2.5pc, a tenfold difference.
“Just want a fair outcome, ideally where tariffs/rules are equally moderate. Nothing more.”
Tesla’s warning about the impact of tariffs on its business comes as Mr Musk’s role in the White House triggers a slump in performance at the company. Sales have fallen sharply across the UK and Europe, and Tesla’s share price has fallen dramatically.
The company’s share price, which soared more than 1,800pc in the five years to the end of 2024, has plunged 40pc since the start of the year.
Tesla has also been targeted by activists, including those who have set fire to several charging stations in Boston and a dealership in Oregon.
On Tuesday, Mr Trump accused “radical Left lunatics” of “trying to illegally and collusively boycott” the business after the stock fell 15pc in one of its worst days on record. Mr Trump has vowed to buy a Tesla himself and urged Republicans to support the company.
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