Shocker: Trump Tariffs Will Hurt Tesla

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Last Updated on: 1st February 2025, 12:27 am

One of the funny things about a convincing con man: you believe all of the good stuff he tells you, but you ignore the warning signs. Going back a century or more, there’s been the story of a slick-talking con man from the city defrauding good but simple country folk. It’s one of the standard narratives of our society. Yet, one of the most obvious con men of the past 78 years, Donald Trump, has gotten common folk thinking that the billionaire from Queens with golden toilets who scammed investors, contractors, and staff for decades was going to help raise up their lives.

Anyway, one thing Trump has been focused on as a presidential policy for years is tariffs, tariffs, tariffs. Those who have supported Trump but understand that a gigantic global tariff war will raise costs for all kinds of common purchases have often written it off as superficial politics — “he cares about what I really care about, but he won’t do something so stupid.” Supporters who don’t know any better, of course, think it’s good economic policy because their leader and savior Donald Trump said so.

Now that Donald Trump is in office — barely — he’s already launching the US toward a tariff bonanza and trade wars.

Of course, Elon Musk is Trump’s newest puppet. And while Musk may think the opposite is true, he has to get in line behind about 10,000 others who have fallen into that trap before. Musk certainly knows that a tariff war would not be good for Tesla, and I presume he thinks he can prevent one. He understands that Tesla pays for various imported goods, and if those get hit with tariffs, Tesla’s costs go up — which means its prices go up (and sales go down) or its gross margins/profit shrink. And he probably thinks that he and his allies can talk sense into Trump. However, as reality dawns, we may start hearing that automakers like Tesla are not selling as many cars as they’d like because of the rising costs coming from the trade conflict.

The nice thing is: we finally got acknowledgement from an executive at Tesla that Trump tariffs would hurt Tesla. Tesla Chief Financial Officer Vaibhav Taneja said on the company’s conference call for shareholders yesterday that, “Over the years we’ve tried to localize our supply chain in every market, but we are still reliant on parts from across the world for all our businesses,” and the “imposition of tariffs” would “have an impact on our business and profitability.”

Indeed.

Elon Musk has lamented numerous times in the past year or two that a lot more people want to buy Teslas, but they just can’t afford them. Jacking up the cost of supplies thanks to a bevy of tariffs would be the opposite of help there.

Trump reportedly wants to put more tariffs on goods from China, Mexico, Canada, and Europe. We’ll see what actually ends up happening.