President Donald Trump’s recent imposition of a 25% tariff on foreign-built cars and light trucks, which will come into effect on April 2, sent shockwaves around the global auto business. While the majority of automakers are gearing up for enormous financial hits, Elon Musk’s Tesla Inc. appears in a unique position of strength.
Tesla’s domestic advantage
Tesla manufactures its vehicles in California and Texas and is less exposed to the new tariffs than its import-dependent competitors. This domestic production strategy puts Tesla far ahead of the pack since competitors are at a disadvantage with higher costs due to the tariffs. CFRA Research analyst Garrett Nelson states Tesla is the “least exposed” to the duties due to its U.S.-based factories. Tesla has also been quick to highlight its American roots, stating its models are some of the most American-made cars.
Impact on global automakers
– Hyundai Motor Co. Although Hyundai produces cars in Alabama and Georgia, it imported over a million vehicles to the U.S. in the previous year, accounting for over half of its U.S. sales. Analysts estimate Hyundai and its affiliate Kia could have to pay up to $7 billion annually in tariffs, nearly 40% of their combined operating profit in 2024.
– Toyota Motor Corp. Even with assembly factories in many states in the United States, Toyota brings in almost half its sales in the US from imports. Goldman Sachs analysts predict a 6% drop in Toyota’s operating profit in 2026 depending on the tariffs.
– General Motors Co. (GM). GM imports vehicles like the Chevrolet Silverado pickup trucks from Mexico and Canada and the Chevy Trax compact SUV from South Korea. These tariffs will increase the cost of production and could have a bearing on pricing strategies.
Domestic manufacturers also affected
Even American-based manufacturers are not exempt. Ford Motor Co., which makes around 80% of the automobiles it sells in America domestically, still makes models like the Maverick pickup and Mustang Mach-E electric vehicle in Mexico. Those models will receive the new tariffs, which will impact the cost structure of Ford.
The tariffs have been met with divided reactions. The United Auto Workers Union hailed the decision as a win for American workers, but industry experts predicted severe disruptions and increased costs. Global officials, including Canadian Prime Minister Mark Carney, have criticized the tariffs as a “direct attack” and have sounded warnings about potential economic and trade blowback.
As the auto sector weathers these new tariffs, Tesla’s plan to manufacture in the US domestically may be its edge, but the market overall has a period of uncertainty and transition to get through.
