Wall Street analysts say Trump’s 25% auto tariffs could benefit Elon Musk’s Tesla but may also cause some drawbacks

March 27, 2025 – According to CNBC, Wall Street analysts say that President Trump’s new 25% auto tariffs, which will be imposed on imported cars and parts, could prove to be a major advantage for Tesla, though they may also bring some downsides. These tariffs are set to take effect on April 3, 2025, and their impact on the global auto industry is inevitable.

Tesla is a company that manufactures all of its vehicles sold in the US at its factories in California and Texas. As a result, Trump’s tariffs, which target imported cars, won’t directly affect Tesla’s vehicles. On the other hand, traditional Detroit automakers like General Motors and Ford, which import cars and parts from Mexico and Canada, will be severely impacted by these tariffs.

CNBC analyst Daniel Roeska stated, “Tesla is an outlier in this industry. Its domestic production is so strong that it will not only escape the pain of tariffs but could also benefit from increased margins as competitors’ prices rise.” Tesla’s Model Y and Model 3, the top-selling electric vehicles in the US, could become even more competitive.

However, Elon Musk himself hasn’t fully endorsed this narrative. In a post on X this morning, he wrote, “Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant.”

Musk pointed out that Tesla relies on imported parts, such as batteries from China’s CATL and other components. These parts will now fall under the 25% tariff, increasing Tesla’s production costs. According to Musk, this impact is “non-trivial,” meaning it’s not insignificant.

Musk is playing a major role in the Trump administration. He heads the Department of Government Efficiency (DOGE) and was one of Trump’s biggest campaign donors. Trump said from the Oval Office, “Elon didn’t ask me for any favors on tariffs. This was my decision.” Still, analysts believe Musk’s political influence is indirectly benefiting his business. Tesla’s stock saw a 0.4% uptick today, while shares of competitors like GM and Ford dropped by as much as 7%.

For Tesla, this isn’t an outright victory. Experts warn that if countries like Canada, Mexico, and Europe impose retaliatory tariffs, Tesla’s global sales could take a hit. Tesla is already facing competition and political backlash in Europe and Canada. Since Musk aligned with Trump, protests against Tesla have intensified, and in the US, sales are expected to decline by 14.5% in the first quarter of this year.