Elon Musk-led electric automaker Tesla (TSLA) has issued a dire warning to the Trump administration about the ongoing trade war. The company said that it could be a target for retaliatory tariffs aimed at the country and increase the cost of making its EVs in the United States.
In an unsigned letter to United States Trade Representative Jamieson Greer, seen by the Financial Times, the electric car manufacturer reiterated its support for the administration’s view on free trade but sounded the alarm about retaliatory tactics against the United States.
“U.S. exporters are inherently exposed to disproportionate impacts when other countries respond to U.S. trade actions,” the letter dated March 11 said.
“For example, 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.”
Tesla’s Model 3. Tesla recently penned a letter warning US officials it risks being exposed to “disproportionate” retaliatory tariffs under President Trump’s trade war.
Tesla
Tesla warned of supply chain constraints, retaliation
The group that penned the letter also warned that President Trump’s tariffs could make it more expensive for Tesla and other U.S. automakers to make vehicles domestically and much less competitive in key overseas export markets.
Tesla pointed out issues within its own supply chain. It finds it difficult to source domestically made components for its EVs and the lithium-ion batteries used to power them. Although it processes lithium in Texas and assembles much of its batteries in its Nevada Gigafactory, many raw materials, like lithium and cobalt, must be imported.
“Nonetheless, even with aggressive localization of the supply chain, certain parts and components are difficult or impossible to source within the US,” Tesla said. They also urged the trade rep to “further evaluate domestic supply chain limitations to ensure that US manufacturers are not unduly burdened by trade actions that could result in the imposition of cost-prohibitive tariffs on necessary components.”
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Tesla added that “consideration should also be given to the timeline of implementation” of such policies, adding that “US companies will benefit from a phased approach that enables them to prepare accordingly and ensure appropriate supply chain and compliance measures are taken.”
“As a US manufacturer and exporter, Tesla encourages USTR to consider the downstream impacts of certain proposed actions taken to address unfair trade practices,” they concluded.
The letter comes as other auto industry figures are sounding the alarm on trade and tariff concerns. In separate comments issued to the USTR this week, industry body Autos Drive America warned that imposing such tariffs “will disrupt production at U.S. assembly plants” and other concerns that ultimately hurt the American consumer.
“Automakers cannot shift their supply chains overnight, and cost increases will inevitably lead to some combination of higher consumer prices, fewer models offered to consumers and shut-down US production lines, leading to potential job losses across the supply chain,” it wrote.
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Tesla faces slumping sales amid White House swooning
The Tesla letter was dated the same day as a very public display of affection towards the American electric automaker.
On the afternoon of March 11, President Trump and Musk toured a smattering of the brand’s EVs in a makeshift outdoor Tesla showroom on the South Lawn of the White House. Before the event, Trump denounced ongoing boycotts and protests against the automaker, promising to buy a Tesla EV to show his support.
However, the latest data from S&P Global Mobility shows that the Musk-led EV firm saw new U.S. registrations fall by 11% in January, while its rivals saw their sales rocket by 44%. According to S&P, Tesla generated 43,411 new registrations that month and claimed a 42.5% market share, a 12 percentage point drop year over year.
Meanwhile, electric vehicles offered by companies other than Tesla generated 58,777 new registrations in January, as Tesla competitors —mostly traditional automakers— saw double and triple-digit percentage gains.
Tesla, Inc. shares are traded on the NASDAQ as TSLA.
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