President Trump is slapping 25% tariffs on all vehicles imported to the USA, together with from our speedy North American neighbors. He’s additionally positioned a 25% tariff on sure components used to construct vehicles. It’s a choice that may probably supercharge the cost of recent and used vehicles, nevertheless it’s additionally a present to Tesla, the corporate run by his largest monetary supporter within the earlier election, Elon Musk.
The brand new tariff regime comes at an auspicious time for Tesla. The corporate is coping with the fallout of Musk’s promotion of far-right ideology and his involvement with the unpopular Division of Authorities Effectivity, which has sparked protests world wide. Tesla has not too long ago relied on promotions and worth cuts to spice up gross sales, and but it nonetheless offered fewer EVs in 2024 than it did in 2023 and is off to a rough start in 2025.
New tariffs might shift that calculus, at the least within the U.S. Tesla builds all of its vehicles destined for the North American market within the U.S. at factories in Fremont, California, and Austin, Texas. Meaning not one of the vehicles it sells within the U.S. might be topic to the 25% car import tax.
Tesla does import round 20-30% of the elements used to construct these vehicles, so that may trigger some headache. Musk admitted on X that Tesla might be “NOT unscathed” by these tariffs and claimed they may have a “important” influence. However the firm’s longstanding effort to determine native provide chains close to its factories is now being rewarded.
Primarily each different automaker is in a worse place than Tesla, and the tariffs will particularly have an effect on competing EVs. Round 80% of the vehicles Ford sells within the U.S. are built domestically. Nevertheless it makes the all-electric Mustang Mach-E and the favored (and way more reasonably priced) Maverick hybrid pickup truck in Mexico.
Basic Motors, in the meantime, builds its Blazer and Equinox EVs in Mexico. Hyundai has discovered growing success with its electrical autos within the U.S. market, however almost all of these are inbuilt South Korea.
Very like Tesla, upstart electrical automakers like Rivian and Lucid Motors gained’t have to fret in regards to the car import tariffs as a result of they make their EVs in Illinois and Arizona, respectively. Like Tesla, they import components that might be topic to tariffs — however they’re in a worse place to soak up these prices since each firms are nonetheless shedding buckets of cash on each EV they promote.
This units up a state of affairs the place different EVs might even see worth will increase larger than any Tesla may implement. That worth separation might turn into much more of a boon to Tesla when it rolls out its mysterious new lower-cost EV this yr — one thing the corporate has mentioned will occur within the subsequent few months.
In fact, Trump introduced these tariffs after weeks of waffling on whether or not he would implement them within the first place. The president has claimed these might be “permanent.” However like so many different issues he proposes, that might all the time change.