The company led by President Trump’s confidant Elon Musk builds all the cars it sells in the United States domestically and will be exempt from tariffs on finished vehicles.
Tesla could be a winner from the auto tariffs announced by President Trump on Wednesday — or at least suffer less than its competitors.
Tesla, whose chief executive, Elon Musk, has taken a leading role in the Trump administration, makes all the cars that it sells in the United States in California and Texas. That means that Tesla vehicles will not be subject to tariffs, although the company will still see its production costs rise because of tariffs on imported parts.
Tesla’s Model Y sport utility vehicle and Model 3 sedan were the two best-selling electric vehicles in the United States last year. But the company has been losing market share to vehicles like General Motors’ Chevrolet Equinox E.V. and Ford’s Mustang Mach-E.
Both of those electric cars are made in Mexico and will become significantly more expensive because they have more imported parts than Tesla cars. The precise impact is unclear because the administration says any U.S. content in cars assembled in Mexico or Canada will be exempt from tariffs.
Mr. Trump said Wednesday that Mr. Musk had not influenced his decision to impose tariffs. “He’s never asked me for a favor in business whatsoever,” Mr. Trump said at the White House.
All automakers, including Tesla, import motors, batteries, raw materials and other parts from other countries. Those components will be subject to tariffs, raising prices across the board. Parts from Canada and Mexico will be granted a temporary reprieve from tariffs until the Trump administration can calculate and exempt from tariffs the U.S. content of each part.
Analysts and industry executives were still calculating the financial impact. But it is likely that the tariffs will severely disrupt supply chains and lead to production cutbacks and layoffs.
Car prices could rise by thousands of dollars. Analysts at Bernstein said the tariffs would add as much as $75 billion per year to automaker costs, which they would have to pass on to car buyers.
Already, many Americans cannot afford to buy new cars. The tariffs will push lower-priced models like the Chevrolet Trax, which is made in South Korea, even further out of reach for middle-income buyers.
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