Tesla is the lone recipient of a massive tariff exemption that looks to ramp up automobile production in the United States.
Since the start of his second term, President Donald Trump has put an emphasis on increasing American manufacturing and reducing the country’s reliance on foreign goods. In an effort to follow through with a pledge to strengthen domestic automobile production, the administration has slashed tariffs impacting U.S. automakers.
On April 29, the White House announced the modification of tariffs on automobiles and automobile parts, which encourage manufacturers to assemble their automobiles in the U.S. Simply put, if an automaker builds a car in the U.S. that has 85% U.S. or U.S.-Mexico-Canada Agreement content, the manufacturer will not owe tariffs on that vehicle’s production for the first year.
There’s just one catch. The exemption exclusively benefits Elon Musk and his company, though the tariff exemption could also benefit consumers, as Tesla will be able to keep its prices stable.
As of May, Tesla was the only automaker that met exemption criteria. In fact, the company manufactures three electric vehicles that are made of 85% American content or more. This includes the Model 3 Performance, Model Y Long Range, and Model Y.
As noted by a study from American University’s Kogod School of Business, Ford is the only other automaker within striking distance of the new criteria. Ford’s assortment of Mustang GTs includes 80% domestic content. Honda, Stellantis, Volkswagen, and General Motors are all within 10 percentage points of qualifying for the exemption.
In the short term, the tariff exemption for Tesla could be viewed as a major boost for the company, which has experienced an assortment of struggles in recent months. Following widespread protests at its dealerships across the globe, Tesla reported a massive drop in sales in its first-quarter earnings report. However, Musk has said the company will right the ship soon.
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