Elon Musk’s electric vehicle company Tesla has joined several other American businesses in raising concerns over retaliatory tariffs that could result from a trade war fueled by President Trump.
In an unsigned letter on Tesla letterhead addressed to the U.S. Trade Representative, Tesla warned that Trump’s actions to “address unfair trade practices” could “inadvertently harm U.S. companies.”
Trump imposed a 25% tariff on goods from Canada and Mexico in an effort to alleviate the “threat posed by illegal aliens and drugs,” according to a White House fact sheet. The tariffs have triggered a trade war that threatens to raise the cost of a number of consumer goods.
Earlier this month, a trade group representing nearly all major automakers except Tesla said the tariffs on Canada and Mexico could lead to drastic price hikes and supply chain disruptions, Reuters reported.
Tesla’s letter, posted on the U.S. Trade Representative website, said that past U.S. tariff actions have led to increased costs for domestic manufacturing and increased tariffs on EVs exported into foreign countries.
“U.S. exporters are inherently exposed to disproportionate impacts when other countries respond to U.S. trade actions,” the letter from Tesla said. “Tesla encourages USTR to consider the downstream impacts of certain proposed actions.”
A representative of Austin, Texas-based Tesla could not be immediately reached for comment.
Tesla’s message to the U.S. Trade Representative is notable because the company’s chief executive, Musk, is a close Trump ally and leads efforts by the so-called Department of Government Efficiency to downsize the federal government. In a show of support for Musk and Tesla this week, Trump purchased a new red Model S on the White House lawn.
Tesla’s stock, which has plummeted 34% since January, received a boost after Trump’s vehicle purchase and was up nearly 4% at the end of the day Friday, closing at $249.98.
The letter comes as some Tesla owners are protesting Musk’s political actions by selling their vehicles or adding anti-Musk bumper stickers to their rides.
Some politicians and celebrities, including Sen. Mark Kelly, a Democrat from Arizona, have publicly shared plans to get rid of their Tesla vehicles.
Tesla facilities in the United States support more than 70,000 employees and are responsible for billions of dollars of economic activity each year, the letter said. The company has multiple manufacturing sites in California, including an assembly plant in Fremont and a “megafactory” in Lathrop.
Tesla’s letter also warned of supply chain issues that could result from existing and proposed trade policies.
“Even with aggressive localization of the supply chain, certain parts and components are difficult or impossible to source within the United States,” the letter said. “Trade actions should not [and need not] conflict with objectives to further increase and support domestic manufacturing.”
The trade group Autos Drive America, which represents foreign automakers, including Toyota and BMW, warned the U.S. Trade Representative in separate comments that imposing broad-based tariffs would disrupt production at U.S. plants and lead to higher prices for consumers.
