Musk's Tesla warns US tariffs could backfire, raise EV production costs

Tesla warns Trump's tariffs may backfire, triggering retaliatory duties, raising EV production costs, and making US exports less competitive globally

Elon Musk’s Tesla has raised concerns that US President Donald Trump’s proposed reciprocal tariffs could negatively impact American businesses, including the world’s most valuable car company.

 

In a letter addressed to US Trade Representative Jamieson Greer, Tesla warned that while it supports fair trade, retaliatory tariffs from other countries could disproportionately harm US exporters, making US-made products less competitive globally, the Financial Times reported.

 

Tesla fears higher costs for US production

 

The letter, dated March 11, stated that retaliatory tariffs on American exports, including electric vehicles (EVs), could increase production costs in the US, ultimately making Tesla’s vehicles less competitive in international markets.

 

“For example, past trade actions by the United States have resulted in immediate reactions by the targeted countries, including increased tariffs on EVs imported into those countries,” Tesla wrote.

 

The Texas-based EV giant emphasised that rising costs could hurt its ability to sell in key global markets and urged the US government to reconsider policies that may trigger trade disputes.

 

Musk’s Tesla slams ‘bipolar’ tariff regime

 

Tesla’s warning highlights the growing concern even among Trump allies like Musk about the potential economic fallout of aggressive trade policies.

 

“[The letter] is a polite way to say that the bipolar tariff regime is screwing over Tesla… It is unsigned because nobody at the company wants to be fired for sending it,” a source familiar with the letter’s drafting told the Financial Times.

 

Concerns over lithium, cobalt tariffs

 

Tesla also urged the administration to ensure that critical minerals like lithium and cobalt, essential for EV batteries and already in short supply in the US, remain affordable to import.

 

“Even with aggressive localisation of the supply chain, certain parts and components are difficult or impossible to source within the US,” Tesla wrote, warning that additional tariffs on such materials would drive up production costs.

 

The letter was submitted as part of the US Trade Representative’s ongoing review of trade policies, tariffs, and regulations that could be impacting American businesses.