Tesla Warns That Trump's Tariffs Are Hurting It Terribly

It's been a rough start to the year for Tesla.

The EV giant kicked off 2025 with the announcement of its first recorded annual sales decline, a staggering 71 percent drop in profit compared to the previous year. This kicked off a chaotic yet inexorable decline in the company's stock price, as recalls and quality issues compounded with CEO Elon Musk's disturbing political stunts and sharply falling sales worldwide.

That's without getting into president Donald Trump's seemingly ever-impending tariffs on Mexico and Canada, which threaten to send the price of a vast range of goods sky high — though their execution has been comically messy, quickly devolving into a seemingly endless series of deadlines and delays that have kicked the stock market into a decline.

If the whole thing's given you whiplash, just imagine what bigwigs at carmakers like Tesla are feeling. Faced with a combination of slumping sales and tariff see-sawing, Tesla execs just sent a panicked letter to the Office of the United States Trade Representative (USTR) expressing concern over "disproportionate impacts" to their bottom line.

The letter said that Tesla was trying to make as many components as possible in the United States, but that "even with aggressive localization of the supply chain, certain parts and components are difficult or impossible to source within the US."

It also warned that "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."

Of course, that's all perfectly true — tariffs tend to be horrible for the economy, putting the crunch on automakers like Tesla, which rely on a huge variety of specialized parts that can be sourced worldwide.

But it also runs smackdab into Musk and Trump's bromance, in which the latter has empowered the former to tear through the federal government, laying off workers and slashing spending.

The letter was sent anonymously, in a likely bid to avoid retaliation from Musk. It's unclear if he was aware of the note as it was being sent, or if he's aware of it now, as he has yet to comment. It follows a 15 percent drop-off in Tesla stock over the week, with investors big and small expressing their disgust at the company's performance.

For Tesla execs, the biggest issue is the threat of retaliatory tariffs, which could auger in an even more hostile trade environment for companies like Tesla worldwide. Trade bickering with countries like China is pretty commonplace, but it's safe to say that no one expected Trump to kick off a shooting match with longstanding trade allies like Mexico, Canada, and the European Union.

That's on top of Trump's desire to cut EV tax incentives — a major issue for Tesla, which was saved from bankruptcy long ago thanks to generous government subsidies.

The letter feels like a feeble gesture, though. As Musk hooks up his new gaming PC and Trump ricochets around the Oval Office from one economic extreme to the next, Tesla's bleeding doesn't look close to stopping anytime soon.

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