Trump imposes new tariffs: effects on Tesla & the car industry

US President Donald Trump has announced new trade tariffs on imports from Canada, Mexico and China which will affect the automotive industry, in particular Teslacould pose major challenges. From the February 4, 2025 25% tariffs will apply to Canadian and Mexican goods and 10 % on Chinese imports.

This measure could not only increase vehicle prices in the USAbut also to production relocations, job cuts and rising costs for raw materials and components and components. But what impact do these tariffs really have on Tesla, the automotive industry and consumers?

📌 Trump tariffs: what exactly has been decided?

The new tariff policy was announced on February 2, 2025 and affects imports from three countries:

Canada & Mexico: 25% tariffs on all auto and supplier products
China: 10% tariffs on raw materials and electric car components

Trump justified this step with the preventing illegal immigration and protecting the US economy. According to the official White House statement, the measures are intended to reduce dependence on foreign imports and secure jobs in the USA.

However, experts are skeptical - they fear that the tariffs could plunge the car industry into a crisis.

🚗 How strong is Tesla affected?

Tesla produces many of its vehicles in the USA, but a significant proportion of the components come from Canada, Mexico and China. According to a Tesla-submission to the National Highway Traffic Safety Administration (NHTSA) many essential components come from these countries:

Cybertruck: 65% from the USA & Canada, 25% from Mexico
Model 3 Long Range: 75 % from the USA & Canada, 20 % from Mexico
Model Y (all variants): 70 % from the USA & Canada, 25 % from Mexico
Model S/X: 60-65 % from the USA & Canada, 20-25 % from Mexico

These tariffs could Tesla force them to do so, increase production costs or strategic restructure supply chainswhich could have a long-term impact on vehicle prices.

Tesla CFO Vaibhav Taneja warned during the Q4 2024 earnings call:
📢 "We have tried to localize our supply chains over the last few years, but we still rely heavily on international suppliers. Tariffs will inevitably impact our business costs and profits."

📉 Impact on the automotive industry: What do experts say?

Industry representatives warn of drastic consequences for car production:

🔹 Flavio Volpe (President of the Canadian Automotive Parts Manufacturers' Association):
📢 "The car industry could grind to a halt within a week. With 25% tariffs, absolutely no one in our business is still profitable."

🔹 John D'Agnolo (President of the Ford union in Windsor, Ontario):
📢 "If these tariffs remain in place, we will lose thousands of jobs. Windsor would become a ghost town."

🔹 Doug Ford (Premier of Ontario):
📢 "Canada could lose up to 500,000 jobs, most of them in the automotive sector."

According to a Bloomberg analysis the measure could lead to a cost increase in North America alone of 33 billion US dollars for the automotive industry.

🔍 Will Tesla increase prices?

Tesla has not yet officially Price increases due to the new tariffs yet. However, given the current price structure, this could change quickly.

Already at the beginning of 2025 Tesla the prices in Canada by up to CAD 9,000 - an indicator that rising costs could be passed on to end consumers.

💡 Possible scenarios for Tesla-customers:
✅ Price increases for Model 3 & Model Y: If Tesla passes on the increased costs to customers
✅ Longer delivery times: If production changes become necessary
✅ More US production: Tesla could use the opportunity to establish more suppliers in the USA

🌎 International reactions: Canada & Mexico plan retaliation

The Canadian government under Prime Minister Justin Trudeau has already issued a 25% retaliatory tariff on USD 155 billion worth of US products. announced. These measures are to be implemented in two phases from February.

The products affected include:
🚨 Cars & car parts
🍷 Wine, beer & spirits
🛠 Industrial products & raw materials

📢 Chrystia Freeland (former Finance Minister & Liberal leadership contender):
"We need to respond specifically and punish US companies that support Trump's policies - including Tesla.“

📌 Conclusion: What does this mean for Tesla-customers?

🔥 Shorter deadlines for favorable prices: If Tesla tariffs are passed on, vehicle prices could soon rise.
🔥 Economic uncertainty: The car industry could suffer from the new trade barriers.
🔥 Potential relocation of production: Tesla Could try to become less dependent on Mexican & Canadian suppliers.