Elon Musk warns Trump that his tariff war could lose him millions with Tesla

Tesla, the company led by the senior advisor to the U.S. president, Elon Musk, has sent an unsigned letter to Washington warning that the company could be affected if Donald Trump continues raising tariffs on foreign products.

According to the Financial Times, Tesla addressed the letter to U.S. Trade Representative Jamieson Greer, arguing that American companies are disproportionately affected when other countries retaliate against U.S. trade measures.

“It is unsigned because no one at the company wants to be fired for sending it,” a source told the Financial Times, recalling the case of Tesla engineer Jared Ottmann, who was fired in late February for criticizing an Elon Musk post on X, where Musk joked about Nazi figures Goebbels, Goering, and Himmler,key members of the Third Reich government.

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According to the automaker’s letter, the tariff increase could translate into higher manufacturing costs, making Tesla’s vehicles less competitive for export and raising concerns about increased costs for importing critical materials like lithium and cobalt.

“Even with aggressive supply chain localization, it is difficult, if not impossible, to source certain parts and components from the U.S.,” the letter states.

Unprecedented trade war

Concerns among U.S. manufacturers have grown since Donald Trump’s return to the presidency and the start of a trade war with key U.S. export partners like China, Canada, Mexico, and the EU.

Canada has already announced that it would impose higher tariffs on electricity exports to the U.S. in response to Trump’s controversial comments, in which he suggested that Canada could become part of the U.S. and outlined his plan to increase tariffs on certain Canadian products.

The European Commission announced on Wednesday the application of “strong but proportional” customs tariffs on certain U.S. products, including bourbon and motorcycles, after Washington threatened to increase tariffs on European steel and aluminum.

In addition, the Trump administration announced a new 200% tax on European wines, champagnes, and liquors—a major blow to EU economies that rely heavily on these exports.

Critical situation

Tesla is facing severe instability in international markets. According to January and February 2025 sales reports, Tesla’s sales have plummeted by 44% in France and Norway, 76% in Germany, and 51% in China, marking its worst sales month in two and a half years.

Joseph Spak, an analyst at UBS Group AG, has predicted that Tesla will see a 16% year-over-year sales drop in Q1 2025, and possibly a 5% decline in total sales for the year. These grim forecasts contrast with Tesla executives’ statements, who insist that growth will return later this year.

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These negative projections have contributed to Tesla’s stock price decline. On Monday, Tesla shares fell by 15.43%, marking the company’s worst trading day since September 2020. Compared to its peak on December 17, Tesla’s stock value has dropped by half.

Although suspensions of Model Y deliveries in Europe and China, along with the rise of Chinese manufacturers, have taken a toll on Tesla’s market position, some analysts argue that Elon Musk’s declining popularity is severely harming the company.

This theory was further reinforced by Donald Trump’s public statements, where he held an event featuring a Tesla vehicle as a “symbol of confidence and support for Elon Musk”.