President Donald Trump's tariff policy isn't popular with the auto industry. That goes for Tesla Motors, too.
Tesla stock dropped 3% in Thursday trading while the S&P 500 and Dow Jones Industrial Average fell 1.4% and 1.3%, respectively.
Tesla sent an unsigned letter to the U.S. Trade Representative warning of the impact of retaliatory tariffs on the electric vehicle maker, according to a report in the Financial Times. Tesla happens to be run by Trump senior advisor Elon Musk.
"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," reads part of the letter, adding U.S. exporters were "exposed to disproportionate impacts when other countries respond to US trade actions."
The USTR and Tesla didn't immediately respond to requests for comment.
Canada placed 25% tariffs on some $30 billion of U.S. goods on Thursday, saying they were in response to Trump's tariffs on steel and aluminum. Cars aren't included right now, but still the fear remains.
The surprising part about the letter isn't the growing fear that a trade war will hurt the car business. It's that it's from Tesla. CEO Musk has been a staunch Trump supporter and leads the newly created Department of Government Efficiency, which has set out to slash costs and waste in the federal government.
Other U.S. car companies have complained about tariffs, mainly those potentially placed on Canada and Mexico. Ford Motor CEO Jim Farley said they threaten billions of dollars in industry profits. The North American auto industry has become highly integrated over the past three decades, with millions of cars and millions more car parts crossing America's northern and southern borders.
Tesla manufactures cars it sells domestically in the U.S., but it still gets parts from Canada and Mexico.
Retaliatory tariffs are a new problem for Tesla and other auto makers. Tesla is a "U.S. exporter," sending cars from America to Canada. Numbers are hard to come by, but based on Tesla's plant capacity, its 2024 exports to all locations should have been in the range of 100,000 vehicles.
Tesla sold about 1.8 million cars worldwide in 2024 and almost 635,000 in the U.S.
Tesla also exports cars to Europe from its plant in Shanghai, but those exports shouldn't be the concern of the USTR.
Tariff fears are hitting many stocks. The S&P 500 closed down 10% from its recent highs. Tesla stock was down more than 50% from highs reached in mid-December as investors worry that Musk's political activities are turning off some buyers.