Tesla has cautioned the Trump administration about potential retaliatory tariffs, as revealed in a letter obtained by the Financial Times. The automaker said its status as a US-based manufacturer could leave it open to additional tariffs aimed at America that raise production costs.
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Tesla Warns Trump Administration That Tariffs May Drive Up U.S. Production Costs
The letter comes after Elon Musk’s announcement of plans to boost Tesla’s US manufacturing footprint, amid a steep fall in the company’s stock price. Tesla’s stock fell 3 percent today, undoing a two-day recovery, after a 14 percent plunge on Monday wiped out all of the gains that Tesla shares had achieved since Trump’s election victory last November.
The letter is dated Tuesday, a day after the big stock drop, and is unsigned. The Financial Times has a theory as to why it is: Musk’s deep connections to President Trump and his administration. As the publication notes, no one wanted to sign the document officially and risk their job, fishing for the Bungs had claimed a source. When Reuters asked for a comment, Tesla declined.
At the same time, President Trump stressed trade tensions on Thursday by threatening hefty tariffs on European alcoholic beverages, designed to dissuade Europe from applying tariffs on American whiskey. Tesla, in the letter, said it was making the effort to localize its supply chain but that it is still required to import certain components, which makes them subject to retaliatory tariffs.
After Monday’s stock selloff, Trump backed Musk, who is also working on a government efficiency push. The President took to his social media platform, Truth Social, stating he would buy a Tesla. Later, he announced plans to classify Tesla car vandals as domestic terrorists. Tesla’s stock has struggled in 2025 due to concerns over vehicle deliveries, with Wall Street expecting the company to miss its first-quarter targets.
Analysts remain divided over whether the shortfall is due to Musk’s political affiliations or a production slowdown caused by factory retooling. With delivery challenges overshadowing Tesla’s AI and robotics ventures, Musk pledged to double US production within two years. The company, which currently produces one million vehicles annually in America, also operates factories in China and Germany.
FAQs
Why is Tesla concerned about tariffs?
Tesla fears that retaliatory tariffs could increase its production costs in the U.S. by affecting imported components.
How has Tesla’s stock been affected recently?
Tesla’s stock has dropped due to concerns over vehicle deliveries and potential production slowdowns.
