A crossroads has emerged for Elon Musk’s Tesla, as the electric vehicle manufacturer has issued a stark warning to the Trump administration about the potential damage tariffs could inflict on the company.
There’s no denying that Donald Trump’s victory in the 2024 U.S. election has significantly benefited both Musk and Tesla, with their values soaring in the months following last November’s election. Musk’s growing influence within the government, though highly controversial, has elevated his profile and secured him a close and powerful ally in the president.
Despite this support, Tesla has recently experienced its first sales decline in nearly a decade, with its stock value continuing to drop in recent weeks. However, Trump has remained a vocal supporter of the company, most notably in a publicity stunt outside the White House where he declared his intent to buy a “brand new Tesla” and announced that acts of vandalism against Tesla dealerships would be classified as “domestic terrorism.”
In a surprising turn of events, Tesla representatives have penned a letter to U.S. Trade Representative Jamieson Greer, warning of the detrimental impact Trump’s tariffs could have on the company’s global exports, as reported by CNN.
“As a U.S. manufacturer and exporter,” the letter states, “Tesla encourages USTR to consider the downstream impacts of certain proposed actions taken to address unfair trade practices. While Tesla recognizes and supports the importance of fair trade, the assessment undertaken by USTR of potential actions to rectify unfair trade should also take into account exports from the United States.”
The warning comes as the Trump administration’s aggressive trade policies continue to provoke the possibility of retaliatory measures from affected nations, which could, in turn, hurt Tesla’s international sales.
According to further reports from CNN, Tesla’s sales in Europe have already plummeted by around 45% in January alone. Additional tariffs—either increasing costs for consumers or imposing extra financial burdens on Tesla—could exacerbate these losses.
The letter also urged the Trade Representative to consider the “limitations in the domestic supply chain,” highlighting the crucial role of imported components like lithium-ion batteries in electric vehicle production.
While Tesla does have some domestic manufacturing capabilities for these components, it still relies heavily on imports from countries like China, which has been a primary target of U.S. tariffs. Additionally, as Reuters reports, China remains Tesla’s second-largest market, accounting for 36.7% of all vehicle sales in 2024. Any retaliatory tariffs imposed by the Chinese government on electric vehicles could severely impact Tesla’s profits—especially as competition heats up from rivals like Xiaomi and BYD, as noted by The New York Times.
