Trump tariffs: Elon Musk's Tesla raises concern over retaliation risk

Elon Musk's electric vehicle company, Tesla, has warned that Donald Trump's trade tariffs could lead to retaliatory measures from other countries, thereby harming Tesla and other American exporters. Despite Musk's close relationship with the U.S. President and his active efforts to reduce the size of the federal government, the company has expressed concerns about the trade war.

In an unsigned letter to the U.S. Trade Representative, Tesla stated that while the company "supports" fair trade, it is worried that U.S. exporters will "face a disproportionate impact" if other countries retaliate with tariffs. The letter's date coincides with an event held by Trump at the White House, where Trump pledged to buy a Tesla as a sign of support for Musk and his company.

It is currently unclear who within Tesla wrote the unsigned letter, nor is it clear whether Musk was aware of it. Tesla's stock price has fallen by 40% since the beginning of this year. Musk is the company's CEO, and while some believe his alignment with the Trump administration is hurting its brand, market analysts say the stock decline is more attributable to concerns about Tesla's ability to meet production targets and declining sales over the past year.

Tesla stated in the letter that it is changing its supply chain to find as many local suppliers as possible for its cars and batteries, thereby reducing its dependence on foreign markets. However, Tesla cautioned that "even with aggressive supply chain localization, certain components remain difficult or impossible to source within the United States."

The U.S. President has imposed a 20% tariff on all imported goods from China, prompting Beijing to take retaliatory taxation measures, including taxes on automobiles. China is Tesla's second-largest market after the United States. "For example, past U.S. trade actions have already resulted in immediate reactions by targeted countries, including raising tariffs on electric vehicles imported into those countries," the letter stated. The EU and Canada have both threatened comprehensive retaliation against U.S. tariffs on steel and aluminum imports, which took effect earlier this week.

In recent weeks, protestors have targeted Tesla showrooms to protest Musk's role in the Trump administration as head of the government efficiency department (Doge) and his role in cost-cutting measures. Earlier this week, Trump stated at the White House event that people protesting Tesla should be labeled as domestic terrorists, while sitting in the driver's seat of a brand new red Tesla he claimed he planned to buy. Trump said the protesters were "hurting a great American company," and anyone who used violence against the electric car maker would "go to hell."