Donald Trump’s tariff onslaught appears to have finally driven a wedge between him and Elon Musk.
The world’s richest person has been one of Trump’s biggest cheerleaders — but when it comes to the tariffs that have shaken global markets, Musk has made it clear he’s not a fan.
The Tesla CEO spent the weekend subtly dissing the president’s “reciprocal” tariffs and warring with Peter Navarro, Trump’s top trade advisor.
Musk told a meeting of Italian politicians on Saturday he hoped for a “zero-tariff system” between Europe and the US, and traded barbs with Navarro.
The Washington Post reported that Musk made a personal appeal to Trump over the weekend to reverse his sweeping tariff plan, without success. Musk did not immediately respond to a request for comment.
On Monday, as global markets fell for a third straight day after the Trump administration doubled down on reciprocal tariffs, Musk posted a video of legendary economist Milton Friedman extolling the virtues of free trade.
Musk has been a longtime opponent of tariffs, even when they benefit his businesses.
Last year, the billionaire spoke out against President Joe Biden’s 100% tariff on Chinese EV makers, which locked Tesla rival BYD out of the US.
“Tesla competes quite well in the market in China with no tariffs and no deferential support. In general, I’m in favor of no tariffs,” Musk said at the time.
Tesla’s tariff headache
The tariffs Trump has unveiled since returning to office pose far more of a threat to Tesla.
Although the EV maker is better positioned than its rivals to cope with the 25% tax on imported vehicles that came into effect last week, the tariff will still raise the costs of the parts Tesla imports into the US.
About 25% of the components for the Model Y are manufactured outside the US, according to regulatory documents, and Musk has warned that the tariff impact on the company will be “significant.”
The round of “reciprocal” tariffs announced last week has less of a direct impact on Tesla — but the resulting market chaos has added fuel to the fire of Tesla’s alarming stock decline.
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The automaker’s share price has fallen more than 11% over the past five days amid a broader market slide, and is now down 38% this year. That decline help push Musk’s net worth below $300 billion for the first time since November on Monday.
Musk also has more reason than most to be worried about the consequences of the brewing trade war.
Like other US companies, Tesla relies on the global supply chain — but the company is especially dependent on China, Tesla’s second-biggest market and the site of a gigafactory.
China risk
That makes Tesla a ripe target if the Chinese government chooses to retaliate against US firms.
China and the US traded further tariff threats on Monday, and the country’s commerce ministry vowed China would “fight to the end” in a statement on Tuesday.
Analysts have warned the escalating trade war with China could also drive Chinese consumers to shun Tesla in favor of local brands, in a patriotic trend similar to the “buy Canadian” movement.
“The backlash from Trump tariff policies in China and Musk’s association will be hard to understate and this will further drive Chinese consumers to buy domestic such as BYD, Nio, Xpeng, and others,” Wedbush analyst and Tesla bull Dan Ives wrote in a Sunday note.
Rising brand toxicity in China would be a hammer blow for Tesla’s already precarious position in the country. The automaker is facing intense competition from local rivals, and has fallen behind BYD in the race to be the world’s largest EV maker.
With sales plunging across the globe and Tesla battling a “brand tornado” over DOGE cuts, more tariff-fuelled disruption is the last thing Musk needs right now.
