Tesla, hosted by Elon Musk, the Trump administration’s “first partner” has been largely reserved for tariffs on foreign-made cars. Local manufacturing of electric vehicle manufacturers will be their collection of imported cars. But like other U.S. automakers, Tesla may still face higher costs of imported auto parts from tariff countries.
Trump represents the latest Salvo in the latest chaotic trade war this week, imposing 25% tariffs on imported passenger cars, light trucks and key automotive components such as engines, transmissions, powertrains and electrical parts. Despite his close ties with Musk, Trump said the Tesla CEO did not make any suggestions to him due to his business conflict.
The tariffs expected to come into effect on April 2 will significantly boost the U.S. auto industry and raise prices for some of the country’s largest brands. For example, both Toyota and General Motors (GM) import about half of their cars to the U.S. Ford (F) produces about 80% of cars in the U.S., while its electric Mustang phones are assembled in Mexico.
By contrast, Tesla has produced all U.S. vehicles in California and Texas, making them largely immune to new tariffs. As Bernstein analyst Daniel Roeska said: “Tesla wins, Detroit is bleeding.” Some automakers have raised prices, Ferrari makes vehicles in Italy, and yesterday (March 27) announced that some models will become 10% more expensive in view of the tariffs.
Musk insists that Tesla will not be completely unscathed. The CEO said in a post on X: “The tariffs on Tesla are still very impactful. According to the National Highway Traffic Safety Administration, 60% to 70% of Tesla auto parts in the United States are manufactured, and the rest is mainly from Mexico. The company also imports batteries from Chinese companies.
Wedbush Securities analyst Dan Ives told Observer that the concept of a car made entirely from U.S. parts is “a fictional story,” adding that even locally made automakers still rely on importing 40% to 50% of auto parts. “Transferring 10% of the automotive supply chain to the U.S. costs hundreds of billions of dollars, which will take four years,” said the analyst, who predicted that tariffs would increase U.S. auto prices by $5,000 to $15,000 on average.
Tesla’s reputation continues to take a hit
While Tesla may not have to raise prices like its peers, its reputation remains at risk due to Musk’s power in Washington. Musk’s role as head of the Department of Government Efficiency (DOGE) has caused some Tesla customers to exit the company, and Tesla’s sales in the first three months of 2025 are expected to drop by 14.5%, according to a Cox Automotive report. Meanwhile, according to Cox Automotive, the list of used Tesla cars has increased by 33% year-on-year.
Tesla has become the main channel for Americans to be frustrated by Musk’s growing political influence in recent months, demonstrating the increase in protests at Tesla dealerships and vandalism of its vehicles, which U.S. Attorney General Pam Bondi described as “family terrorism.” Demonstrations are expected to intensify tomorrow (March 29) as radicals plan to hold a “Tesla Cancel” protest that will hold rallies at hundreds of Tesla locations in the United States and around the world.
