The Latest Possible Victim To Fall To Trump's 'Tariff War' - Tesla

According to media reports, on March 11, Tesla warned in a letter to the Office of the U.S. Trade Representative (USTR) that President Trump's trade war could make it a target for retaliatory tariffs and increase the cost of manufacturing cars in the United States.

The letter highlights that even Tesla, led by Trump's close ally Elon Musk, is concerned about the potential impact of widespread tariffs.

Previously, Trump appointed Musk as the head of the newly established Department of Government Efficiency (DOGE), under the leadership of the U.S. federal government, which is undergoing an unprecedented downsizing.

Tesla stated that it is crucial to ensure that the Trump administration's efforts to address trade issues do not inadvertently harm U.S. companies. The company expressed its eagerness to avoid the kind of retaliation faced during previous trade disputes, which led to countries affected by tariffs raising import duties on electric vehicles.

US exporters are inherently exposed to disproportionate impacts when other countries respond to US trade actions, Tesla said in the letter. The assessment undertaken by the United States Trade Representative (USTR) of potential actions to rectify unfair trade should also take into account exports from the United States. For example, past trade actions by the United States have resulted in immediate reactions by the targeted countries, including increased tariffs on electric vehicles imported into those countries.

Trump is considering imposing high tariffs on cars and auto parts produced worldwide as early as April.

Tesla warned that even with aggressive supply chain localization efforts, certain components are difficult or impossible to source domestically in the U.S. The company also emphasized that it has been reforming its global supply chain to localize production as much as possible.

As a US manufacturer and exporter, Tesla encourages the Office of the United States Trade Representative (USTR) to consider the downstream impacts of certain proposed actions taken to address unfair trade practices, Tesla stated in the letter.

Autos Drive America, a trade association representing major foreign automakers such as Toyota, Volkswagen, BMW, Honda, and Hyundai, also warned the USTR that broad-based tariffs will disrupt production at U.S. assembly plants.

The group added, Automakers cannot shift their supply chains overnight, and cost increases will inevitably lead to some combination of higher consumer prices, fewer models offered to consumers, and shut-down U.S. production lines, leading to potential job losses across the supply chain.

Due to Musk's close relationship with Trump and his role in the U.S. government, Tesla's public image and global sales have been severely damaged. Since the beginning of this year, Tesla's stock price has fallen by 40%.

Tesla is not the only Musk-led company facing retaliation due to tariffs. Last month, Doug Ford, the Premier of Ontario, Canada, announced the cancellation of a contract with Musk's SpaceX satellite internet company Starlink in response to tariffs.