Elon Musk Is in Huge Trouble Over Donald Trump's Tariffs

President Donald Trump's escalating tariff war is putting Tesla in serious danger.

As Politico reports, the trade war has put Tesla CEO Elon Musk in an extremely awkward position politically.

While the president's top henchman's businesses are somewhat insulated thanks to a strong manufacturing presence in the United States, Musk's ambitions to turn Tesla into the "most valuable company in the world" by focusing on autonomous driving and robotics could be thwarted by flatlining international trade.

Free trade is the "lifeblood of the auto industry," Wedbush Securities analyst and Tesla bull Dan Ives told Politico. "It’s the lifeblood of autonomous and robotics and the future, not just thinking about domestically, but globally."

Trump's disastrous trade war could make it extremely difficult for Musk to deliver on his characteristically overzealous promises. For instance, he told investors last year that his EV maker will "solve autonomy," an extremely ambitious goal that will require major breakthroughs in self-driving technologies. (It's worth noting that the mercurial CEO has made such a promise every year for a decade.)

Musk has also made baffling claims that the company's Optimus humanoid robot "will be overwhelmingly the value of the company" and rake in $10 trillion in revenue, making it the "biggest product in history."

But given China's extremely dominant role as the top producer of humanoid robotics, Trump's extremely steep tariffs could make achieving such a goal extremely difficult, according to experts — if not outright impossible.

Optimus, in particular, "would be the place that you would see [the impact of tariffs] because a lot of those components are not necessarily coming from the US," Constellation Research founder Ray Wang told Politico.

Musk has already aired his grievances with Trump's plan to shut down international trade and economically isolate the US from the world.

Earlier this month, Musk broke against Trump, railing against the architect of his catastrophic tariff policy, advisor on trade and manufacturing, Peter Navarro, calling him a "moron."

He also publicly stated that he thinks people should be able to work in both Europe and North America as they please and that there should be a "free trade zone" between the two.

The reality: no company of Tesla's size and complexity is well-positioned for Trump's tariffs.

"Over the years, we’ve tried to localize our supply chain in every market, but we are still very reliant on parts from across the world for all our businesses," Tesla CFO Vaibhav Taneja warned during an earnings call in January, as quoted by Politico. "Therefore, the imposition of tariffs, which is very likely, will have an impact on our business and profitability."

The EV maker has already seen the effects of those interventions, suspending new orders for both Model S and Model X vehicles on its Chinese websites last week.

The timing couldn't be worse. Tesla has seen sales plummet worldwide, in large part thanks to spiking anti-Musk sentiment. Investors are fearful of terrible news ahead of next week's first-quarter earnings call.

Even Musk's SpaceX could suffer from collapsing supply lines as it relies on Chinese-made tech. The space company begged a US trade representative for tariff exemptions, as The Telegraph reported late last month.

SpaceX is now scrambling to move production to the US.

It remains to be seen where Trump and Musk's rapidly deteriorating bromance will lead next. But considering the extremely unfavorable stock market and massive volatility, Musk will likely waste no time in trying to beg Trump for some reprieve.

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