Tesla has urged the U.S. government to consider the potential consequences of new auto tariffs, warning that retaliatory measures from affected countries could hurt American car exports.
The electric vehicle maker raised concerns in a letter to the U.S. Trade Representative (USTR) this week, joining other automakers in opposing the Biden administration’s proposed 25% tariffs on imported vehicles, set to take effect in April.
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“While Tesla recognizes and supports the importance of fair trade, the assessment undertaken by USTR of potential actions to rectify unfair trade should also take into account exports from the United States,” the company wrote. “U.S. exporters are inherently exposed to disproportionate impacts when other countries respond to U.S. trade actions.”
Unlike some automakers, Tesla produces all vehicles sold in the U.S. domestically, making it less vulnerable to direct tariff impacts. However, the company is concerned that retaliatory duties from trading partners could increase costs for U.S.-built Teslas shipped abroad, reducing their competitiveness in foreign markets.
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The letter highlights how past U.S. trade actions have led to immediate countermeasures, including higher tariffs on American-made EVs. Tesla cautioned that previous special tariff measures had already raised production costs for its domestic factories and made U.S.-manufactured cars more expensive overseas.
“Certain parts and components are difficult or impossible to source within the United States,” the automaker noted, referring to key elements such as batteries and semiconductors, which are primarily sourced from Asia. Tesla proposed a phased approach to allow companies time to adjust supply chains and compliance measures accordingly.
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Tesla is not alone in its opposition. Autos Drive America, an alliance representing major foreign automakers such as Toyota, Volkswagen, BMW, Honda, and Hyundai, also warned that broad-based tariffs could disrupt production at U.S. assembly plants and threaten domestic jobs.
“Automakers cannot shift their supply chains overnight,” the alliance wrote in its own letter, cautioning that tariffs could result in higher consumer prices, fewer vehicle options, and potential plant closures.
Source: Reuters