Elon Musk Has Key Advantage To Deal With Donald Trump Tariffs

Elon Musk's Tesla may have a head start on President Donald Trump's latest rounds of tariffs, according to economic analysts. Trump announced the new tariffs on dozens of countries across the globe on imports on Wednesday, what he called "liberation day."

Newsweek reached out to Tesla for comment via email.

Why It Matters

Trump has argued that the tariffs are necessary to restore U.S. manufacturing, but economists say companies are going to pass along the new expenses to consumers, resulting in Americans paying higher prices.

A previously announced tariff on automobiles also went into effect at midnight.

The stock market reacted negatively to the new tariffs on Thursday, with the Dow Jones Industrial Average dropping more than 1,000 points.

What To Know

Tesla, which produces its vehicles in factories in California and Texas, may have an advantage over some of its competitors in the automobile industry in grappling with the new tariffs because of its domestic production. Bernstein analyst Daniel Roeska wrote in a note to clients last week that "Tesla wins" while "Detroit bleeds" because of the tariffs, Forbes reported.

"Tesla is the clear structural winner.... For everyone else, this is a margin reset and real drag on near-term earnings power," he wrote

Ryan Monarch, a professor of economics at Syracuse University, told Newsweek on Thursday that Tesla has an advantage over its competitors but won't go completely unscathed by the tariffs.

"They are not unaffected by the tariffs, but they kind of have a head start on a number of their competitors, especially in the EV sector, in terms of locating their supply chain and getting their inputs from products in the U.S.," he said.

Musk's role in the Trump administration as head of the Department of Government Efficiency (DOGE) may also be beneficiary to the company, Monarch said.

"Elon Musk's involvement in the government puts his company in a good position to ask for exemptions or to look for a way around these tariffs," he said. "And that's just another reason why economists think tariffs are destructive economic policies. Because it encourages this type of, 'Well, I'll give you an exemption but not you.'"

Tesla will still be impacted by the tariffs, Monarch said, noting that it imports some parts that are unavailable in the U.S.

The company's stock dropped 5.6 percent on Thursday, in line with global trends. The stock has been dropping fairly consistently throughout 2025.

Kevin Thompson, finance expert and the founder of 9i Capital Group, told Newsweek that the tariffs on these parts will still likely make the price of Tesla vehicles rise.

"A lot of the components that go into those cars—things like headlamps, brakes and glass—come from abroad," he said. "If those inputs get hit with import tariffs, the cost goes up. And eventually, that cost makes its way to the end consumer. It's Economics 101, higher input prices, higher cost for consumer."

Mark Williams, a professor of finance at Boston University's Questrom School of Business, offered a different perspective to Newsweek, saying that the larger economic effects of tariffs will still cut into Tesla's bottom line despite its domestic production advantage.

Tariffs, overnight, "severed" the global supply chain, having the effect of "reducing car profitability and sending the stock value of the major automakers, including Tesla, tumbling," he said.

"Should Trump's tariff war trigger a full-fledged recession, demand for any car, whether a Tesla or a Ford, will fall. A tariff war is a high-stakes gamble that our largest trading partners will acquiesce and accept trade terms that help the U.S. but harm them."

Musk previously said the cost of tariffs to Tesla won't be "trivial."

"To be clear, this will affect the price of parts in Tesla cars that come from other countries," Musk wrote on social media in March.

David Bieri, a professor of global finance at Virginia Tech, told Newsweek that Tesla has some advantages over competitors. Its domestic production gives it a chance to be a leader in the electric vehicle sector over other U.S.-based automobile manufactures. But still, it is facing a flurry of other issues on the global scale.

Its products have become less competitive across the globe because of non-tariff elements, such as the "global market has moved on" to better products, as well as backlash the company is facing over Musk's involvement in the Trump administration.

"Tesla, right now, needs all the help it can get because its stock price is collapsing, sales are collapsing," he said. "It's rather quite gloomy out there for Tesla."

What People Are Saying

Kevin Thompson, finance expert and the founder of 9i Capital Group, told Newsweek: "The full impact is still playing out, but we're already seeing a reaction in the stock market. U.S. markets took an immediate hit, down around 3 percent, and automakers have been feeling the pressure."

Ryan Monarch, a professor of economics at Syracuse University, told Newsweek: "Many EVs already cost more to make than their sale price, that's part of a long transition in specializing in EVs. Increasing tariffs on these car parts is just going to make that transition even harder."

Tesla, in a letter to U.S. Trade Representative Jamieson Greer: "Even with aggressive localization of the supply chain, certain parts and components are difficult or impossible to source within the U.S."

What Happens Next

In addition to the automobile tariffs, the 10 percent "baseline" tariffs will take effect on April 5, and the reciprocal tariffs will kick in on April 9. A Budget Lab analysis found that Americans could pay up to $4,200 more per year as a result of the tariffs.