Trump Vs. Musk: Tesla To Be Hurt By Tariffs On Mexico Despite Friendship

President Donald Trump's promise to place tariffs on Canada and Mexico could hurt automakers, including Tesla Inc TSLA.

What Happened: On Thursday, Trump postponed plans to place tariffs on goods imported from Canada and Mexico until April. The one-month reprieve could see automotive companies racing to get parts and models into the U.S.

A previous report said that Ford Motor Company F, General Motors GM and Stellantis STLA have several models that are assembled in the American border countries that would see significantly higher prices for automakers and potentially consumers.

Experts estimated that some models would cost thousands of dollars more due to tariffs with some up to $12,000 more. This leaves automakers with tough decisions of whether to pass the entire higher cost onto the consumer, which could hurt demand for several models.

Tesla is known for having some of the most American-made models. Still, it gets more than 20% of its auto parts from Mexico, according to a report from Electrek.

Here is a chart showing the percentage of parts made in Mexico for various models, according to the National Highway Traffic Safety Administration:

Model 3 LR AWD/RWD: 20%
Model 3 Performance: 20%
Model Y LR AWD/RWD: 25%
Model Y Performance: 20%
Cybertruck: 25%
Model S: 20%
Model X: 25%

The NHTSA includes the U.S. and Canada together for parts. That means Tesla could also get some of its parts from Canada.

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Why It's Important: While the tariffs on automotive imports are currently delayed, they are scheduled to come back in April. Some experts question how long the tariffs will be in place, as they could be a political tool to get Canada and Mexico to agree to other items.

Tesla CEO Elon Musk is among Trump’s closest allies. While some think that the close relationship between Musk and Trump keeps the companies connected to Musk immune from short-term and long-term threats, they could be mistaken.

Trump has undone several major electric vehicle initiatives put in place by former President Joe Biden and is expected to push for Congress to remove the $7,500 federal tax incentive on purchasing a new EV.

While that move could hurt Tesla and other EV companies, Musk has been in favor of removing the subsidy as it will hurt his competitors more than his own company.

If tariffs on Mexico and Canada come back and last for more than a day, Tesla like other companies could be forced to decide if it will eat the extra costs and hurt its profit margins or pass the higher costs onto consumers.

Due to Musk's growing political presence and a refresh of the Model Y, Tesla has been part of a large overall sales decline across many parts of the world. With higher prices, Tesla could see even lower demand from consumers.

A Brand Finance survey found that Musk’s comments may have hurt Tesla’s brand value.

Tesla fell to 36^th place in the 2025 rankings, down from 18^th place in 2024. The electric vehicle company had a brand value of $43 billion in the 2025 rankings, down 26% from $58.27 billion in 2024.

Tesla’s scores in categories such as "reputation," "recommendation" and "consideration" all fell from the prior year.

Price Action: Tesla stock is down 6.5% to $260.99 on Thursday versus a 52-week trading range of $138.80 to $488.54. Tesla stock is down 31.1% year-to-date in 2025.

While Tesla stock previously soared after Donald Trump won the 2024 presidential election, the stock is back to nearly where it was after the victory.

Tesla stock closed at $251.44 on Nov. 5 and opened for trading at $284.67 on Nov. 6 after Trump’s victory was announced.

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