Tesla sounds alarm on Trump tariffs, warns of global trade fallout

File Source: Reuters

Elon Musk’s Tesla has issued a stark warning about the potential consequences of Donald Trump’s trade tariffs, cautioning that U.S. exporters could suffer if other nations retaliate.

The electric carmaker expressed its concerns in an unsigned letter addressed to the U.S. trade representative, stating that while it “supports” fair trade, American manufacturers remain “exposed to disproportionate impacts” in a global trade war.

The letter’s authorship remains unclear, and it is uncertain whether Musk was aware of its release. Notably, the warning came on the same day Trump held a White House event where he showcased a new Tesla and vowed to buy one in support of the company.

Tesla’s financial struggles have intensified, with its stock price plummeting 40% since the start of the year. While some critics argue Musk’s alignment with Trump is tarnishing Tesla’s brand, market analysts attribute the decline to concerns over missed production targets and falling sales.

In the letter, Tesla revealed efforts to restructure its supply chain by sourcing more car and battery components locally to reduce dependence on foreign markets. However, it warned, “even with aggressive localization of the supply chain, certain parts and components are difficult or impossible to source within the U.S.”

Trump’s latest trade policy includes a 20% tariff on all imports from China, leading Beijing to respond with retaliatory levies—including those on automobiles. This poses a significant threat to Tesla, as China is its second-largest market after the U.S. The letter noted that past trade measures “have resulted in immediate reactions by the targeted countries, including increased tariffs on EVs imported into those countries.”

The European Union and Canada have also threatened sweeping countermeasures in response to U.S. tariffs on steel and aluminum imports, which took effect earlier this week.

Public backlash against Musk’s cost-cutting initiatives in Trump’s administration has also intensified. As the head of the Department of Government Efficiency (Doge), Musk has been a central figure in the president’s efforts to shrink federal spending. Tesla showrooms have been targeted by demonstrators in recent weeks, protesting against his role.

Trump addressed the controversy during his White House event, condemning the protesters and insisting they should be labeled as “domestic terrorists.” Sitting in the driver’s seat of a brand-new red Tesla, the president defended the company, saying demonstrators were “harming a great American company” and warned that anyone using violence against Tesla would “go through hell.”