Tesla Warns it Faces Retaliation, Costs From Trump Trade War

EV maker signals concern over potential retaliatory moves by other countries as a trade war escalates

Bloomberg News

Teslas — Tesla are parked in lot after arriving at a port in Yokohama, Japan, on Thursday, Feb. 6, 2025. An expanding trade war is adding to a host of challenges the automaker faces. Photo by Toru Hanai /Bloomberg

Tesla Inc. is signalling concern over potential retaliatory moves by other countries as a trade war escalates in the wake of President Donald Trump’s moves to impose tariffs on a wide range of imports.

The electric-car maker warned the administration this week that any such actions could drive up manufacturing costs and make its vehicles less competitive in international markets.

“U.S. exporters are inherently exposed to disproportionate impacts when other countries respond to U.S. trade actions,” Tesla said in a March 11 letter to United States Trade Representative Jamieson Greer. “Past trade actions by the United States have resulted in immediate reactions by the targeted countries, including increased tariffs on EVs imported into those countries.”

Trump’s trade-policy moves in recent weeks — including announcing and then delaying tariffs on neighbouring countries, imposing levies on metal imports, and threatening significant duties on certain European goods — have rattled the global economy. The automotive industry, in particular, is bracing for upheaval over moves that threaten to seize up supply chains and add thousands of dollars to car prices.

The new comments from Tesla echo concerns expressed in late January by chief financial officer Vaibhav Taneja, who said on the company’s earnings call that “the imposition of tariffs, which is very likely, and any reciprocity will have an impact on our business and profitability.”

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Tesla in its letter this week urged the administration to consider the effects its moves could have on the EV and battery supply chain, which remains highly dependent on other countries.

“Even with aggressive localization of the supply chain, certain parts and components are difficult or impossible to source within the United States,” the company said.

The letter, which was reported earlier by the Financial Times, was included in the public comments to the U.S. Trade Representative’s office as the agency reviews whether American businesses could be hurt by trade practices.

Tesla didn’t immediately respond to a request for comment.

The trade war adds to a host of challenges the automaker is facing, including sliding sales in key markets, a sharp decline in its stock this year, instances of vandalism on Tesla showrooms and a backlash against chief executive Elon Musk, who has played a prominent role in Trump’s administration.

That led British Columbia, Canada’s third most populous province, this week to pull government subsidies for people to install Tesla chargers at their homes. B.C. Premier David Eby said in a press conference Thursday that the move was aimed squarely at the billionaire CEO, saying residents would not want their money to benefit Musk.