Why Tesla Loves the New Tariff Rules

TODAY’S STORY

Automakers may soon qualify for tariff exemptions, at least for vehicles composed of 85% U.S. or USMCA content. The White House’s latest tariff relief plan looks like a win for Tesla, but most other automakers are unlikely to benefit.

With an average of 81% U.S. content in its vehicles as of 2024, Tesla is closest to meeting the 85% threshold. The next closest is Honda, at just 63%, according to research from American University.

Automakers face steep hurdles in boosting U.S. content: entrenched global supply chains, limited domestic capacity, higher costs, regulatory uncertainty, and a shortage of skilled labor.

These challenges aren’t easily solved. “Making a production change for vehicle manufacturing takes minimum, months, and usually years, along with hundreds of millions if not billions of dollars,” said Sam Fiorani, an analyst at AutoForecast Solutions, in an interview with the AP.

In other words, you can’t reshuffle a global supply chain with a memo and a handshake.

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Kieran & Justin Ryan