Tesla warns it could face retaliatory tariffs

WASHINGTON (Reuters): US 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.

The Tesla comments reflect those of many US businesses concerned by Trump’s tariffs, but is notable because it is from Tesla.

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 comments were made in a letter to the US Trade Representative’s Office and available on the office’s web site. Dated Tuesday, it is among hundreds sent by companies to the office about US trade policy.

It is not clear who at Tesla wrote the letter, which is unsigned but is on a company letterhead. Tesla did not immediately respond to a request for a comment.

Tesla says it is important to ensure that the Trump administration’s efforts to address trade issues “do not inadvertently harm US companies.”

It says it is 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 US tariffs.

“US exporters are inherently exposed to disproportionate impacts when other countries respond to US trade actions,” Tesla said in the letter. “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 warns 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 adds that companies will “benefit from a phased approach that enables them to prepare accordingly and ensure appropriate supply chain and compliance measures are taken.”

“As a US manufacturer and exporter, Tesla encourages USTR to consider the downstream impacts of certain proposed actions taken to address unfair trade practices,” the EV maker says.

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 US 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 US production lines, leading to potential job losses across the supply chain.”