Tesla’s Tariff Reality Check: What Elon Musk Just Confirmed!

If you’ve been following the news, you probably saw the headline: the U.S. is slapping 25% tariffs on all foreign-made cars and auto parts starting April 3rd. At first glance, many Tesla owners (and shareholders) saw this as a win. After all, Tesla builds its cars in the U.S.—what’s there to worry about?

But Elon Musk just stepped in to clarify: Tesla is not getting off easy.

In a post on X (formerly Twitter), Musk said the impact of these new tariffs is “significant” for Tesla—even though final vehicle assembly happens stateside.

“Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant.”
– @elonmusk, March 26, 2025

Wait, how does this affect Tesla?

Let’s break it down. Tesla may assemble vehicles in the U.S., but a big portion of the parts used in production still come from abroad:

• Over 20% of parts come from Mexico (and will be subject to tariffs starting May 3rd unless something changes)

• Components from China and Europe are now facing the full brunt of the 25% import tax

• Tesla also produces much of its manufacturing equipment in Canada

So, while Tesla might dodge some of the pain compared to traditional automakers like GM and Ford (who assemble a lot of vehicles overseas), it’s still facing higher production costs. That means Tesla’s pricing—and possibly timelines for new models—could be impacted.

What does this mean for Tesla owners?

If you already own a Tesla, you’re not directly affected just yet. But if you’re thinking about upgrading, or if you’re keeping an eye on the used market, here’s what to consider:

• Prices may go up: If the cost of parts rises, it’s likely Tesla will pass some of that cost along to buyers.

• Supply chain slowdowns: The tariffs could make it harder (or more expensive) for Tesla to get certain components, potentially delaying service or new model launches.

• Market volatility: Tesla stock jumped after the tariff announcement—likely because investors assumed Tesla had the home-field advantage. But now that the full picture is out, things could get bumpy again.

What about Canada?

Here’s another twist: in response to the tariffs, Canada just froze Tesla’s access to EV rebates and is holding back pending payments. This is likely political—Musk’s role in Trump’s new Department of Government Efficiency (DOGE) has made Tesla a target. As trade tensions rise, other countries might follow suit.

So, is there any upside?

In the short term, this is a mixed bag. While traditional automakers are scrambling, Tesla’s U.S. assembly operations give it a relative advantage. But in the bigger picture, tariffs introduce uncertainty, added cost, and global friction—all of which are bad news for a company with global supply chains and ambitions.

If you’re a Tesla owner or fan, it’s important to stay clear-eyed. Yes, Tesla’s domestic production is a strength—but it’s not a force field. These new tariffs could ripple through everything from service center parts to vehicle prices.

As Musk put it himself: “Tesla is NOT unscathed.”