The automotive world is bracing for major upheaval following US President Donald Trump’s latest trade move—slapping a hefty 25 percent tariff on all foreign-built vehicles entering the US. While the decision has sent shockwaves through the industry, one brand appears poised to weather the storm better than most: Tesla.
Trump signed the executive order this week, declaring that the tariffs would drive growth and invigorate the US car industry “like it’s never flourished before.” However, the reality for many automakers is that popular models from Japan, South Korea, and Germany are set to become significantly more expensive, with price hikes of $5,000 to $15,000 expected, according to Goldman Sachs. Even Detroit’s homegrown brands won’t escape the impact, as several of their models rely on foreign components.
But amid the uncertainty, Tesla finds itself in a relatively strong position. The electric vehicle manufacturer produces most of its cars that are sold in the US domestically, limiting exposure to the sweeping levies that will hit global car and component imports into the US. That’s in stark contrast to rivals like Ford, General Motors, and Stellantis, whose shares took a hit of between 2.1 and 7 percent as markets reacted to the news.
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Trump himself acknowledged that Tesla may emerge as an unlikely beneficiary of the tariffs, claiming the duties could be “net neutral or even good” for the EV giant. While the president insisted that Tesla CEO Elon Musk had no direct role in advising on the new policy, his administration has been notably vocal in its support for the company in recent weeks, even going as far as launching probes into vandalism at Tesla dealerships.
That’s not to say Tesla is immune. Musk was quick to point out that the new tariffs will drive up the cost of certain components the company sources internationally. “To be clear, this will affect the price of parts in Tesla cars that come from other countries. The cost impact is not trivial,” he said.
Tesla relies on imported lithium-ion batteries from China’s CATL, along with other parts from South Korea, Japan, and Mexico, according to import filings. Any increase in costs could force the company to make strategic adjustments, though the brand’s largely US-based production footprint still puts it in a stronger position than many of its competitors.
With automakers likely to pass on tariff costs to customers through higher vehicle prices, some analysts suggest Tesla may gain an edge in the market. A steeper price tag on imported combustion-engine vehicles could further narrow the gap between traditional petrol-powered cars and Tesla’s EV lineup, making electric options more attractive to American buyers.
