In a recent statement, President Donald Trump announced his plan to impose a 25% tariff on all vehicles not manufactured in the United States. Interestingly, he mentioned that one of his top advisors, Elon Musk—the CEO of Tesla—had not given any input on this decision due to a potential conflict of interest. Trump made it clear that, despite Musk’s advisory role and substantial $290 million contribution supporting Trump’s re-election, Musk has never requested any business favors from him.
Elon Musk, while continuing to lead SpaceX and Tesla, also heads the Department of Government Efficiency (DOGE). This initiative aims to reduce federal government expenses and personnel while consolidating or eliminating some federal agencies and services.
Earlier in the month, the South Lawn of the White House was transformed into a temporary showroom for Tesla vehicles. In a display of support, President Trump inspected the electric vehicles after announcing on Truth Social that he intended to purchase a Tesla. As Musk stood by, Trump admired the unique design of the Tesla Cybertruck, calling the vehicles “beautiful.”
Reporters inquired about the potential impact of the new tariffs on Tesla’s business. President Trump speculated that the effects could either be neutral or positive, citing Tesla’s manufacturing facilities in Texas and California. “For anyone with plants in the U.S., this could be beneficial,” he stated.
Tesla, in a communication to the U.S. Trade Representative, expressed concerns about sourcing difficulties for specific parts domestically despite efforts to localize their supply chain. The company urged consideration of the broader consequences of actions intended to tackle unfair trade practices.
Automakers, including Tesla, often source components like headlamps, brakes, and other parts from suppliers in countries such as Mexico, Canada, and China. Neither Musk nor Tesla provided immediate comments on how the 25% tariffs might affect their operations.
With the increasing number of automakers offering fully electric models, Tesla is facing intensified competition, although its biggest competitor, China’s BYD, has yet to receive authorization to sell its electric cars in the United States.
Following Trump’s announcement, shares of several domestic automakers, including General Motors, Ford, Rivian, and Tesla, experienced a slight decline in after-hours trading.
