Tesla warns it could face retaliatory tariffs #CanadaFinance

By David Shepardson

WASHINGTON (Reuters) – U.S. automaker Tesla has warned that it and other major American exporters are exposed to retaliatory tariffs that could be leveled in response to President Donald Trump’s aggressive use of tariffs.

Tesla CEO Elon Musk, a close ally of Trump, has been leading the White House effort to shrink the size of the federal government. The billionaire heads up the so-called Department of Government Efficiency.

The letter reflects comments by many U.S. businesses concerned by Trump’s tariffs, and is notable because it is from Tesla. It is not clear who wrote the letter, which is unsigned but is on company letterhead.

Tesla said it is important to ensure that the Trump administration’s efforts to address trade issues “do not inadvertently harm U.S. companies.” It said it was eager to avoid retaliation of the type it faced in prior trade disputes, which resulted in increased tariffs on electric vehicles imported into countries subject to U.S. tariffs.

“U.S. exporters are inherently exposed to disproportionate impacts when other countries respond to U.S. trade actions,” Tesla said in a letter to the U.S. Trade Representative’s Office. “For example, past trade actions by the United States have resulted in immediate reactions by the targeted countries, including increased tariffs on EVs imported into those countries.”

Trump is considering imposing significant tariffs on vehicles and parts made around the world in early April.

Tesla warned that even with aggressive localization of the supply chain, “certain parts and components are difficult or impossible to source within the United States.”

The automaker added that companies will “benefit from a phased approach that enables them to prepare accordingly and ensure appropriate supply chain and compliance measures are taken.”

Tesla did not immediately respond to a request for a comment.

“As a U.S. manufacturer and exporter, Tesla encourages USTR to consider the downstream impacts of certain proposed actions taken to address unfair trade practices,” the EV maker said in the letter dated Tuesday.

Autos Drive America, a trade group representing major foreign automakers including Toyota, Volkswagen, BMW, Honda and Hyundai, warned USTR in separate comments that imposing “broad-based tariffs will disrupt production at U.S. assembly plants.”

The group added, “automakers cannot shift their supply chains overnight, and cost increases will inevitably lead to some combination of higher consumer prices, fewer models offered to consumers and shut-down U.S. production lines, leading to potential job losses across the supply chain.”

(Reporting by Ananya Mariam Rajesh in Bengaluru and David Shepardson in Washington; Editing by Peter Henderson and Matthew Lewis)