While Elon Musk has emerged as one of President Donald Trump‘s most loyal supporters—backing his policies and contributing over $300 million to his reelection campaign—the tech mogul’s companies are now fearful of the unintended consequences of the administration’s aggressive trade measures.
Tesla, Musk’s electric vehicle company, has reportedly warned that the recent tariffs could escalate production costs and expose the automaker to retaliatory actions from international markets.
Why It Matters
Trump campaigned heavily on the economy, emphasizing his plans to lower costs and revitalize U.S. manufacturing jobs. A key part of his strategy has been using tariffs to pressure trade partners, including Canada, Mexico, China and the European Union.
This week, Trump doubled down on his approach, standing firm on a 25 percent tariff on steel and aluminum imports from Canada and Mexico despite growing backlash. In response, Canada has threatened retaliatory tariffs, potentially targeting American-made electric vehicles, including Teslas.
What To Know
According to the Financial Times, Tesla warned in a letter to U.S. Trade Representative Jamieson Greer that exporters could face “disproportionate impacts” when other countries retaliate against U.S. trade policies, despite the company’s stated support for fair trade.
“For example, past U.S. trade actions have triggered immediate retaliation, including higher tariffs on EVs imported into those countries,” Tesla said in the unsigned March 11 letter.
A person familiar with Tesla’s letter told the Financial Times that the message was essentially a warning shot to the administration: “It’s a polite way to say that the bipolar tariff regime is screwing over Tesla.”
The source added that the letter remained unsigned because nobody at the company wanted to be fired for sending it.
U.S. President Donald Trump, Tesla CEO Elon Musk, and Musk’s son X Æ A-Xii, stand next to Tesla vehicles on the South Lawn of the White House on March 11, 2025.
U.S. President Donald Trump, Tesla CEO Elon Musk, and Musk’s son X Æ A-Xii, stand next to Tesla vehicles on the South Lawn of the White House on March 11, 2025.
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Tesla warned the Trump administration that the tariffs would drive up production costs in the U.S. and make the company less competitive in global markets. It also urged the government to avoid further increasing the cost of key minerals like lithium and cobalt, which are already in short supply domestically.
“Even with aggressive localization of the supply chain, certain parts and components are difficult or impossible to source within the U.S.,” the company wrote, warning that excessive tariffs could result in “cost-prohibitive barriers” for necessary imports.
Tesla emphasized that it has been overhauling its global supply chain to localize as much production as possible, pointing to battery manufacturing in Reno, Nevada, and lithium processing in Corpus Christi, Texas.
Musk’s Concerns
The letter comes after two weeks of volatile trade policy announcements that have unsettled businesses and financial markets, raising concerns that the U.S. economy could slip into a recession. It also highlights how even Tesla, led by Trump ally Musk, is worried about the fallout from sweeping tariffs.
Tesla isn’t the only Musk-owned company facing retaliation. On February 3, Ontario Premier Doug Ford announced the cancellation of a $68 million contract with Starlink, Musk’s satellite internet company under SpaceX, in response to the tariffs.
Tesla sent a similar letter in response to the first round of Trump tariffs during the president’s first administration, according to a source familiar with the process. Miriam Eqab, an associate general counsel at Tesla, uploaded the latest letter to the U.S. trade representative website.
Musk’s close ties to Trump—including his new role as head of the Department of Government Efficiency (DOGE)—have also begun to weigh on Tesla’s public image and global sales. Tesla’s stock has already suffered a 40 percent decline since the start of the year.
What People Are Saying
Dan Ives, a Wedbush Securities financial analyst, told the Associated Press: “Tesla is becoming a political symbol of Trump and DOGE, and that is a bad thing for the brand.”
President Donald Trump, discussing his move to make violence against Tesla a terrorism charge: “I will do that. I’m going to stop them. Because they are harming a great American company. It’s a great product, and we have to celebrate [Musk].”
What Happens Next
Wall Street’s sell-off hit a new low Thursday after Trump’s escalating trade war dragged the S&P 500 more than 10 percent below its record, which was set just last month.
Update 3/13/25, 5:14 p.m. ET: This article was updated with additional information.