Amid escalating global trade tensions driven by U.S. President Donald Trump’s latest wave of tariff threats, Elon Musk’s Tesla has issued a strong warning about the potential economic fallout. The company expressed fears that it could become a high-profile target for retaliatory measures from countries affected by U.S. policies, which could significantly raise the cost of producing vehicles domestically and undermine its competitive edge in international markets.
In an unsigned letter addressed to U.S. Trade Representative Jamieson Greer, Tesla outlined how American exporters — particularly those in the electric vehicle (EV) sector — face "disproportionate impacts" when foreign governments retaliate against U.S. trade actions. The letter, dated March 11 and reported by Reuters, pointed to historical instances where U.S. tariffs triggered swift countermeasures, including increased import duties on American-made EVs.
This warning comes as the U.S. remains embroiled in a prolonged trade standoff with key economic partners, including the European Union, Canada, and China. Trump recently escalated tensions by threatening a 200% tariff on alcohol imports from Europe, further unsettling global markets. Tesla’s letter underscores the ripple effect such policies create — not only for companies directly involved in the targeted industries but also for those caught in the crossfire.
A source familiar with the matter described the letter to The Financial Times as a "polite but pointed" critique of the current tariff regime, which the source characterized as “bipolar” in its unpredictability and impact on global supply chains. The letter remained unsigned, reportedly to avoid putting any one employee at risk of backlash or dismissal for challenging the administration’s stance.
Tesla warned that rising costs could make American-made EVs less attractive in foreign markets, potentially reversing years of progress in expanding its global footprint. The automaker also urged the administration to reconsider tariffs on essential raw materials such as lithium, cobalt, and nickel — vital components in EV batteries — which remain in critically short supply within the U.S.
Tesla emphasized its ongoing efforts to localize production and reduce reliance on overseas suppliers, highlighting major investments in its battery factory in Reno, Nevada, and its lithium refining facility in Corpus Christi, Texas. Despite these strides, the company admitted that sourcing certain key materials domestically remains infeasible due to supply shortages and a lack of developed infrastructure.
The letter pressed Greer to evaluate supply chain limitations more comprehensively to ensure that American manufacturers aren’t unfairly burdened by tariffs on parts they simply can’t source from within the country. It warned that imposing further trade barriers could lead to "cost-prohibitive tariffs," ultimately harming innovation, growth, and the broader push for sustainable transportation.
“As a U.S. manufacturer and exporter, Tesla encourages USTR to carefully weigh the downstream impacts of trade measures intended to address unfair practices,” the letter stated. This echoes a similar plea the company made during Trump’s first term, when a wave of tariffs roiled the global economy.
The March 11 letter was uploaded to the USTR website by Miriam Eqab, an associate general counsel at Tesla, bringing the automaker’s concerns into the public eye.
Musk’s close relationship with Trump has been a defining feature of this saga. Since Trump’s return to office, Musk has emerged as one of his most prominent supporters, contributing over $250 million to the president’s re-election efforts. This alliance has drawn intense criticism, especially in Europe, where consumers have launched boycotts against Tesla vehicles, associating Musk’s political ties with the rise of right-wing populism.
Tesla’s stock has reflected these turbulent dynamics, plummeting 40% since the start of 2025 amid falling sales and broader economic uncertainty. Beyond financial woes, Tesla’s brand has faced public backlash in the U.S., with protesters gathering outside showrooms, accusing Musk of sacrificing the company’s vision for sustainable innovation in favor of political maneuvering.
Despite this, Trump remains a steadfast supporter of Musk and Tesla. In a high-profile event at the White House promoting American-made EVs, Trump praised Musk as a "truly great American" and vowed to buy a Tesla himself — a promise he fulfilled by purchasing a red Model S sedan, showcasing the vehicle at a campaign rally to roaring applause.
The letter paints a complex picture of Tesla’s current position: a company striving to maintain its technological edge and global market presence while navigating an unpredictable trade landscape and growing political entanglements. As tariffs loom and geopolitical tensions intensify, Tesla’s call for supply chain support and tariff relief signals the broader challenges facing American manufacturers caught between economic policy shifts and international backlash.
For Musk, the stakes are even higher. His personal alignment with Trump — once seen as a strategic advantage — now risks alienating key markets and customers. Whether Tesla’s plea to the USTR results in tangible relief or becomes another chapter in the ongoing trade war remains to be seen, but one thing is clear: the road ahead for Tesla is more uncertain than ever.
