A day after US President Donald Trump announced a 25% import tax on foreign cars and parts, the global automotive industry faced significant disruption. Major carmakers in Japan, Germany, and the UK saw billions wiped off their market value as investors reacted to the news. Shares of American firms, including General Motors, dropped sharply, with GM falling over 7%.
Tesla, which is known for its US-based manufacturing and whose CEO Elon Musk is a major Trump donor, remained largely unaffected in terms of its stock, which ended the day flat. However, Musk cautioned that Tesla would not escape the effects of the tariffs. “Tesla is NOT unscathed here,” Musk stated on social media, adding that the cost impact would be significant.
Despite Tesla’s Model Y topping Cars.com’s 2024 American-made cars index, it still sources 70% of its parts from the US, meaning it is vulnerable to the tariffs. Patrick Masterson, lead researcher for the index, emphasized that no vehicle is entirely made in the US, and the impact of the tariffs would be felt by all automakers, Tesla included.
The tariffs are expected to affect $300bn-$400bn worth of imports and could raise vehicle prices by $4,000 to $12,000, depending on the car model, according to Macquarie. This move threatens to increase costs for manufacturers and consumers alike, further complicating the global car industry.
