Tesla not ‘unscathed’ by Donald Trump’s 25% auto tariff, says Elon Musk; Here's why

Tesla CEO Elon Musk said Wednesday that US President Donald Trump’s new 25% tariff on imported vehicles will deliver a “significant” blow to his electric car company.

“Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant,” Musk clarified on X after a user said all Tesla cars sold in the US market are manufactured in the country.

Trump announced the tariffs Wednesday in the Oval Office, saying, “What we’re going to be doing is a 25% tariff for all cars that are not made in the United States.”

Set to take effect April 3, the levies target passenger vehicles, light trucks, and key auto parts, piling onto existing duties on steel, aluminum, and goods from Mexico, Canada, and China.

Trump framed the move as a way to revive US manufacturing and fund tax cuts, suggesting it could be “net neutral” for Tesla, which Musk leads alongside a government cost-cutting effort.

Why Tesla could be hit

The White House said that the 25% tariff will apply to sedans, SUVs, crossovers, minivans, cargo vans, light trucks, and components like engines, transmissions, and electrical parts, with potential expansion to other parts later.

Tata AutoComp, Tata Consultancy Services (TCS), Tata Technologies, and Tata Electronics have reportedly become key suppliers to Tesla.

Tesla is also reportedly procuring components like wiring harnesses, electric motors, gearboxes, and high-value electronics from over a dozen Indian firms, including Samvardhana Motherson, Suprajit Engineering, and Bharat Forge.

Under the United States-Mexico-Canada Agreement (USMCA), importers can certify US content to avoid tariffs on compliant portions, with the rate applied only to non-US components. USMCA-compliant parts remain tariff-free until the Secretary of Commerce and US Customs and Border Protection establish a new process.

The tariff announcement jolted global markets on Thursday.

In India, Tata Motors shares fell 6.65% to ₹661.10 on the NSE, and Samvardhana Motherson dropped 7.5% to ₹124.73. Sona BLW Precision declined 4.63% to ₹473.95, while Bharat Forge lost 3% to ₹1,147.95.

Toyota Motor and Mazda Motor, key US exporters, led declines in Japan, with South Korea’s Hyundai Motor and Kia Corp also hit hard.

Trump sees tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining US industrial base.

"We're going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of the things that they've been taking over the years," Trump said at the Oval Office on Wednesday. "They've taken so much out of our country, friend and foe and frankly, friend has been oftentimes much worse than foe."