Tesla suspended new orders of two models on its Chinese website Friday as Beijing raised tariffs on American goods to 125 percent in the nation’s ongoing trade fight with the U.S.
While Tesla did not provide a reason for suspending the orders, the move may signal Musk — one of Trump’s fiercest allies — and his company are bracing for the effects of the president’s trade war.
“The fact that they’re still selling the cars, but not importing them points to one obvious conclusion: The tariff impacts are having an effect on Tesla’s international sales,” said Maxwell Shulman, research analyst with Beacon Policy Advisors.
The intensifying trade war puts the business interests of Tesla and Musk — who gave millions to reelect Trump and campaigned for him in key swing states — at a crossroads with the president, who is not letting up on the tit-for-tat with China.
“It’s not even like the politics helped him [Musk] fend off these tariffs that hurt his company,” said Sarah Kreps, director of Cornell University's Tech Policy Institute.
“It’s almost like it’s the worst of all worlds that he put his neck out there, lost support from the domestic consumers of Tesla and now, because [the] tariffs are having this dismal effect in his other big market, which is China.”
Tesla is now among the various companies forced to make quick changes to their foreign manufacturing process, whether that be through scaled back production or delayed shipments, in the wake of the fluctuating trade war.
The two paused Tesla models — Model S and X — are those that are almost entirely assembled in the U.S. at Tesla’s Fremont, Calif., factory.
The two models that remain active on the Chinese website — Model 3 and Model Y — are made at Tesla’s Shanghai Gigafactory and therefore more insulated from the tariff pressure as a result.
The website changes happened abruptly overnight Thursday, just one day after Trump shifted the attention of his trade war with China. As of Friday, the U.S. tariffs on Chinese goods sit at a 145 percent.
"Even with time, this kind of tariff policy would be extremely disruptive and costly” said Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics.
“But without time to adjust, you just have to effectively either increase prices with these tariff levels...you just can't increase prices enough to compensate for the tariff, and you definitely can’t just eat the tariff because it’s so large for most goods,” Chorzempa added.
Read more in a full report at TheHill.com over the weekend.
