Tesla Warns the U.S. Trade Rep About the Harmful Impact of Tariffs

Dow Jones03-14

President Donald Trump's tariff policy isn't popular with the auto industry. That goes for Tesla Motors, too.

Tesla stock dropped 3% in Thursday trading while the S&P 500 and Dow Jones Industrial Average fell 1.4% and 1.3%, respectively.

Tesla sent an unsigned letter to the U.S. Trade Representative warning of the impact of retaliatory tariffs on the electric vehicle maker, according to a report in the Financial Times. Tesla happens to be run by Trump senior advisor Elon Musk.

"As a U.S. manufacturer and exporter, Tesla encourages USTR to consider the downstream impacts of certain proposed actions taken to address unfair trade practices," reads part of the letter, adding U.S. exporters were "exposed to disproportionate impacts when other countries respond to US trade actions."

The USTR and Tesla didn't immediately respond to requests for comment.

Canada placed 25% tariffs on some $30 billion of U.S. goods on Thursday, saying they were in response to Trump's tariffs on steel and aluminum. Cars aren't included right now, but still the fear remains.

The surprising part about the letter isn't the growing fear that a trade war will hurt the car business. It's that it's from Tesla. CEO Musk has been a staunch Trump supporter and leads the newly created Department of Government Efficiency, which has set out to slash costs and waste in the federal government.

Other U.S. car companies have complained about tariffs, mainly those potentially placed on Canada and Mexico. Ford Motor CEO Jim Farley said they threaten billions of dollars in industry profits. The North American auto industry has become highly integrated over the past three decades, with millions of cars and millions more car parts crossing America's northern and southern borders.

Tesla manufactures cars it sells domestically in the U.S., but it still gets parts from Canada and Mexico.

Retaliatory tariffs are a new problem for Tesla and other auto makers. Tesla is a "U.S. exporter," sending cars from America to Canada. Numbers are hard to come by, but based on Tesla's plant capacity, its 2024 exports to all locations should have been in the range of 100,000 vehicles.

Tesla sold about 1.8 million cars worldwide in 2024 and almost 635,000 in the U.S.

Tesla also exports cars to Europe from its plant in Shanghai, but those exports shouldn't be the concern of the USTR.

Tariff fears are hitting many stocks. The S&P 500 closed down 10% from its recent highs. Tesla stock was down more than 50% from highs reached in mid-December as investors worry that Musk's political activities are turning off some buyers.

At the request of the copyright holder, you need to log in to view this content

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • WealthBuilder
    03-17
    WealthBuilder
    Tesla will crash and burn . Sell before it is too late, I told you all for many weeks now when price was much higher than last week closing . 
  • CaseyLKC
    03-15
    CaseyLKC
    Okay
  • Loyster
    03-14
    Loyster
    Why Elon don't want to tell trump directly 
  • Guavaxf30
    03-14
    Guavaxf30
    Let's see whether his master will take heed or abandon him.  Publicly lauding up on Tesla is having a negative effect as Tesla is continuing to experience the dump. And knowing Trump's character, he will know when to cut loss.
  • SamsonChow
    03-14
    SamsonChow
    I cannot believe President Musk did not know that Tariffs will impact Tesla!  Elon is absolutely absent gro Tesla!  Spending too much time clowning in DC!  The board should protect the brand by firing Elon Musk!  Withdraw support for his compensation 
Leave a comment
5
5