Shares of Tesla (TSLA) soared 5.02% in pre-market trading on Thursday after President Donald Trump announced 25% tariffs on all cars made outside of the United States, while exempting domestically produced vehicles. The electric vehicle maker, which assembles all of its US-sold cars within the country, is poised to benefit from the new trade policy.
The tariff announcement sent shockwaves through the auto industry, with traditional automakers like General Motors, Ford, and Stellantis seeing their stocks tumble. GM was down 8.4%, Ford fell 2.9%, and Stellantis declined 4% as investors weighed the impact of the tariffs on their operations.
Tesla's advantageous position stems from its US-based manufacturing facilities in California and Texas. Will Scharf, a White House aide, clarified that the new tariffs would apply to "foreign made cars and light trucks," effectively shielding Tesla from the direct impact of the trade measure. However, it's worth noting that Tesla does source some parts from other countries, which could be subject to tariffs.
The move comes as Tesla faces challenges in other markets, with recent reports indicating a 45% drop in European sales in January and shrinking market share in China. The tariff exemption for US-made vehicles could provide a much-needed boost to Tesla's domestic market position and potentially offset some of its international headwinds.
While Tesla stands to benefit from the tariffs, the broader implications for the auto industry and global trade relations remain uncertain. Analysts and industry experts are closely monitoring the situation, as the new trade policy could reshape the competitive landscape in the US auto market.
