Tesla (TSLA.US) issues warning: 'Panicked' about retaliatory trade measures and soaring costs

As the trade war escalates, with President Donald Trump imposing tariffs on a wide range of imported goods, Tesla is worried about retaliatory moves by other countries. The electric vehicle maker this week warned the US government that any such actions could push up its manufacturing costs and weaken the competitiveness of its cars in international markets.

In a letter to Jamieson Greer, the US trade representative, on March 11, Tesla said: “When other countries respond to US trade actions, US exporters are bound to be disproportionately affected. US past trade actions have triggered immediate responses from target countries, including tariffs on imported electric vehicles.”

Mr Trump’s recent trade policy actions — including announcing tariffs on neighbouring countries and then delaying them, imposing tariffs on metal imports and threatening high tariffs on some European goods — have shaken the global economy, especially the auto industry, which is bracing for policy changes that could disrupt supply chains and push up car prices by thousands of dollars.

Tesla’s comments echo those expressed by Vaibhav Taneja, the chief financial officer, in early January, when he said on a conference call: “The probability of tariffs is high, and any retaliatory action would impact our business and profitability.”

Tesla urged the government in this week’s letter to consider the impact of its actions on the highly dependent electric vehicle and battery supply chains.

The company said: “Even with a strong push for localisation, some parts are difficult or impossible to source domestically.”

The letter was included in the public comment period as the US trade representative’s office reviews whether US businesses are being harmed by trade actions.

Tesla did not immediately respond to a request for comment.

The trade war has added to a series of challenges facing the carmaker, including falling sales in major markets, a sharp fall in its share price this year, vandalism at its showrooms and resistance to its chief executive, Elon Musk, who has been active in the Trump administration.

That has led to British Columbia, Canada’s third most populous province, this week scrapping government subsidies for residents to install Tesla charging stations in their homes. David Eby, the province’s premier, said at a news conference on Thursday that the move was aimed directly at the billionaire chief executive, saying residents would not want their money to benefit Mr Musk.