Easy Trading Tips – Elon Musk has cautioned that Tesla Inc. (NASDAQ: TSLA) will face substantial challenges due to former U.S. President Donald Trump’s proposed 25% tariffs on all foreign-made vehicles.
“Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant,” Musk posted on X, responding to a discussion on where cars sold in the U.S. are manufactured.
While Musk didn’t specify the exact effects on Tesla, the tariffs will also apply to key electrical and drivetrain components that the company imports from China.
Although Tesla produces all vehicles sold in the U.S. domestically, it relies on imported parts, including batteries and electrical components, which could drive up costs and disrupt supply chains.
Tesla’s stock dropped nearly 6% on Wednesday after the tariff announcement, adding to the company’s existing challenges. Higher import costs could further complicate Tesla’s efforts to refresh its aging vehicle lineup, advance autonomous driving technology, and develop its much-anticipated robotaxi fleet.
Recent data also shows that Tesla’s European sales plunged over 40% for the second consecutive month in February, struggling against weaker demand and increasing competition from rival automakers.
Additionally, Tesla is dealing with a consumer backlash in both Europe and the U.S., with some boycotting the brand over Musk’s perceived political affiliations and involvement in Trump’s Department of Government Efficiency.