Tesla CEO says tariff impact will be significant

The Trump administration has announced a 25% tariff on auto imports to the US and Tesla CEO, Elon Musk, said that the impact of the new announcement will be significant on the electric vehicle (EV) company.

Earlier today, US President Donald Trump signed a proclamation invoking Section 232 of the Trade Expansion Act of 1962 to impose a 25% tariff on automobiles and component imports, citing that it could be a ‘critical’ threat to U.S. national security.

This new tariff will be applied to imported passenger vehicles including sedans, SUVs, crossovers, minivans, cargo vans and light trucks. The scope of the new announcement includes parts such as engines, transmissions, powertrain parts, electrical components.

However, the Trump administration could go even further on imposing tariff on other components if required. The 25% tariff will go into effect on April 2.

“Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant” wrote Musk on X social media site.

Source – X

Tesla has two major production facilities, one in Texas and another in California. The EV maker has houses thousands of employees to build and assemble new vehicles in the US.

According to Cars.com’s American-made index for 2024, the Tesla Model Y was standing in the first spot for the third consecutive year as the most American-made car. This was also the best-selling car on the planet for the past two years.

But there’s more to the story, the tariff terms clearly mentioned that the components will also be in the target. Despite producing cars in the U.S., Tesla has a huge supply chain of parts and electronics, and some of these parts likely to be imported or sourced from supplies from other markets.

However, we don’t know the magnitude of the tariff that will impact Tesla’s prices for customers.

After this announcement, Tesla’s share down at least 5% on Wednesday and 2% on NASDAQ, after a sudden growth in the past week.