Tesla, run by Donald Trump cheerleader Elon Musk, has warned US officials it risks being exposed to “disproportionate” retaliatory tariffs under the president’s escalating trade war.
The electric carmaker raised the issue in a letter to the US Trade Representative’s (USTR’s) Office on the same day Mr Trump bought a Tesla car in a show of support for his close ally after a bloodbath for the company’s shares.
Investor concerns, mostly linked to the trade war, have pushed Tesla’s market value 50% down from its December peak – a hit of roughly £800bn.
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The backlash against the trade war intensified this week when Tesla suffered its worst daily loss in five years as part of broader stock market falls on fears that US consumers and businesses are now facing the prospect of a recession.
The declines at Tesla were also linked by market analysts to domestic anger over Mr Musk‘s work in government to shrink its size through leadership of the so-called Department of Government Efficiency.
Tesla’s letter was one in a growing mailbag, with businesses widely complaining about the threat of rising costs and red tape.
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It was not clear who wrote the Tesla document, as it was unsigned, but stated it was important to ensure that the Trump
administration’s efforts to address trade issues “do not inadvertently harm US companies.”
Tesla said it wanted to avoid retaliation of the type it faced in prior trade disputes, which resulted in increased
tariffs on electric vehicles imported into countries subject to US tariffs.
Canada and the EU are among nations to have responded with counter measures after US tariffs on all steel and aluminium imports came into effect this week.
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“US exporters are inherently exposed to disproportionate impacts when other countries respond to US trade actions,”
Tesla said in the letter.
“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.”
Mr Trump is considering imposing significant tariffs on vehicles and parts made around the world in early April.
Such duties were initially confined to Canada and Mexico but later mostly suspended for four weeks amid complaints from US carmakers.
The president has said they will return on 2 April, alongside “reciprocal” tariffs which are widely expected to hit the European Union for the first time.
Tesla’s letter warned that protectionist policies designed to bolster US manufacturing and jobs were further harmful as “certain parts and components are difficult or impossible to source within the United States.”
It called for a phased approach to allow more time to bolster supply chains.
“As a US manufacturer and exporter, Tesla encourages USTR to consider the downstream impacts of certain proposed actions taken to address unfair trade practices,” the EV maker concluded.
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The document builds on wider pressure to force a U-turn, with industry body Autos Drive America declaring this week that the tariff regime will harm production and earnings, with sales also set to face challenges as tariff costs are reflected in prices.
“Automakers cannot shift their supply chains overnight, and cost increases will inevitably lead to some combination of higher consumer prices, fewer models offered to consumers and shut-down US production lines, leading to
potential job losses across the supply chain,” it wrote.
