Tesla warns that Trump’s trade war could hurt U.S. automakers

Electric vehicle manufacturer Tesla has raised concerns about the potential negative impact of the Trump administration’s trade policies on U.S.-based EV companies. In a letter dated March 11 and addressed to the Office of the United States Trade Representative (USTR), the company, which is owned by billionaire Elon Musk, urged the administration to carefully consider how its trade policies could harm domestic automakers like Tesla.

In the letter, Tesla emphasized the importance of evaluating the downstream effects of proposed actions aimed at addressing unfair trade practices. The company specifically highlighted the possibility of retaliatory tariffs against the U.S., which could result in higher prices for their vehicles and potentially reduce demand from overseas markets. This comes in the wake of President Trump’s decision to increase tariffs on steel and aluminum imports to 25%, with the European Union announcing retaliatory measures set to take effect on April 1.

Furthermore, Tesla expressed concerns about the impact of previous tariffs on Canada and Mexico, which automakers warned could significantly raise the cost of cars by thousands of dollars. President Trump’s efforts to boost domestic manufacturing and create jobs through these tariffs have been met with skepticism from companies like Tesla, who argue that certain parts and components are challenging to source within the U.S. even with aggressive localization of the supply chain.

The letter to the USTR coincided with President Trump’s public declaration on social media that he would purchase a Tesla to show support for Musk and his company amid a decline in stock value. However, some consumers have been deterred by Musk’s political involvement, leading to decreased sales for Tesla both domestically and internationally.

Tesla’s commitment to investing in a domestic supply chain, including the construction of battery manufacturing and processing facilities in the U.S., underscores the company’s efforts to support American manufacturing. However, the complexity of the automobile supply chain and the potential burden posed by trade actions taken by the White House remain key concerns for Tesla.

As the debate over trade policies and tariffs continues, it is essential for policymakers to carefully consider the implications for U.S.-based EV companies like Tesla. Balancing the goals of promoting domestic manufacturing and ensuring a competitive global market will be crucial in safeguarding the interests of American automakers in an increasingly complex trade landscape.