Trump’s plan to save Tesla

Trump and Commerce Secretary Howard Lutnick have been trying to talk up Tesla and boost the stock, which is unethical, possibly illegal, and also ineffective. They didn’t move the stock.

That’s where Trump’s tariffs intersect with Tesla’s outlook. Trump’s tariffs would harm many domestic manufacturers, especially in the car business, because they’d raise the cost of metals, minerals, and many other components that are imported. US companies can also suffer when trade partners retaliate with tariffs or other punitive measures on American products.

Tesla is no exception. In a March 11 filling with the US Trade Representative, Tesla explained how Trump’s tariffs could hurt its business.

To the rescue? President Trump and Tesla CEO Elon Musk with his son stand near a Tesla car at the White House in Washington, D.C., on March 11. (Reuters/Kevin Lamarque) · REUTERS / Reuters

The automaker said that “U.S. exporters are inherently exposed to disproportionate impacts when other countries respond to U.S. trade actions.” That seems to reflect specific concerns that China and Europe, Tesla’s second- and third-biggest markets, could target Tesla directly if they retaliate against any new Trump measures. Tesla also urged the Trump administration to “ensure that U.S. manufacturers are not unduly burdened by trade actions that could result in the imposition of cost-prohibitive tariffs on necessary components.”

Nobody signed the Tesla letter, but it’s hard to imagine Musk, as CEO, would feel otherwise. Musk obviously has Trump’s ear, and it would be only logical if he were telling Trump the same thing privately.

Two weeks after Tesla publicly aired its concerns, Trump seemed to backpedal on the extent of the April 2 tariffs. On March 24, Trump said, “I might give a lot of countries breaks. It’s reciprocal, but we might be even nicer than that.” Investors took that to mean there would be a lot of wiggle room on the tariffs and that Trump would make deals to protect favored industries or companies from trade war damage. Tesla’s stock jumped by 12% that day. The S&P 500 index rose a healthy 1.8%.

Investors still aren’t sure if Trump’s April 2 tariffs will be punitive or underwhelming. Lee, a Wall Street bull, thinks Trump has shown his hand and a “Trump put” — implicit support for stock prices through policy action — is in the cards. He sees stocks reaching new highs within weeks.

Goldman Sachs, by contrast, thinks “risks lean toward a negative surprise,” according to a March 25 research note. Goldman Sachs foresees Trump punishing trade partners for so-called non-tariff barriers that keep US goods out of foreign markets or push up their prices, even when tariffs are low. Goldman Sachs also points out that Trump has a habit of imposing high tariffs and then lowering them in exchange for concessions, rather than the other way around.

A convoluted and seemingly arbitrary matrix of tariffs that vary by sector or even product category would be no surprise. During his first term, Trump put new taxes on many imported goods and then issued more than 40,000 exemptions on a case-by-case basis if companies could make the case they deserved an out. That essentially allowed Trump and his minions to decide who should pay the tariffs and who shouldn’t, which could certainly happen again.

Through exemptions or other favored treatment, Trump could easily find ways to let Tesla evade tariff pain, even if it hit competitors. He could also make deals with China and Europe that allow Tesla to escape tariff retaliation.

That wouldn’t solve all of Tesla’s problems, however. Sales are still tumbling as competitive products bearing no political stigma hit the market and give buyers ample alternatives to Tesla vehicles. And Musk seems committed to his new role as political provocateur, with his political action committee now funding conservative causes far beyond DOGE’s turf.

Trump can protect Tesla from tariffs, but bringing back customers is still up to Musk.

Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.

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