CEO Elon Musk said that the impact of U.S. President Donald Trump’s auto tariffs on Tesla is “significant.” In a post on the social media platform X, Musk said, “Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant.”
Tesla domestically manufactures all of its cars sold in the U.S. However, it imports certain parts, electrical components and batteries from China. “To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivia,” Musk added in a separate post on X.
Tesla’s shares fell nearly 6 percent on Wednesday following Trump’s tariff announcement, further impacting the already struggling carmaker. The company’s shares are trading 5.58 percent lower today at $272.06.
Tesla faces mounting challenges
The tariffs come after data showed that Elon Musk’s Tesla sold 42.6 percent fewer cars in Europe so far this year, according to the European Automobile Manufacturers Association (ACEA). Tesla’s sales of its China-made electric vehicles also dropped 49.2 percent annually in February to 30,688 cars, the lowest since August 2022, as the U.S. automaker faces severe competition from Chinese rivals.
Musk’s brand has also been targeted by a wave of protests in the United States since the company’s CEO became an adviser to U.S. President Donald Trump and began sweeping cuts to the federal government.
In a bid to raise demand for its products, Tesla has sought expansions into new strategic markets. The electric carmaker announced that it will launch in Saudi Arabia next month. Tesla also signed a lease deal to open its first showroom in Mumbai earlier this month, aligning with its plans to sell imported cars in India.
Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant.
— Elon Musk (@elonmusk) March 27, 2025
Read: Trump’s announcement of 25% tariffs on foreign auto imports sends markets on a bumpy ride
Trump imposes 25 percent tariff on auto imports
On Wednesday, U.S. President Donald Trump followed through on his longstanding threats to impose new tariffs on imported cars on March 26, announcing that a 25 percent import tax on vehicles not made in the U.S. would take effect next week. This move has further strained the already delicate trade relationships between the U.S. and its allies.
Trump confirmed that, starting April 3, the U.S. will levy a 25 percent tariff — in addition to existing duties — on imports of finished vehicles. Currently, the base U.S. tariff rate for automotive imports stands at 2.5 percent.
The new tariffs will apply to vehicles assembled in countries with free-trade agreements with the U.S., such as Canada, Mexico, and South Korea. These nations, along with Japan and European car manufacturers from Germany, Italy, and the U.K., will be heavily impacted by the new measures.
