President Trump Alleviates Auto Tariffs, Favoring Only Tesla

President Donald Trump’s tariff strategies have profoundly influenced the U.S. economy, prompting the administration to roll back some of its more stringent actions. On the 100th day of Trump’s second term, Commerce Secretary Howard Lutnick declared a significant change: the administration would reduce the 25% tariff on cars. Lutnick stated that the objective is to incentivize automakers to shift production back to the United States.

With the updated policy, automakers can entirely evade the tariff if their vehicles fulfill specific requirements. A fact sheet from the White House released this week indicated that vehicles assembled in the U.S. with a minimum of 85% domestic content would be fully exempt from the tariff.

At present, only one automaker meets this exemption — Tesla.

According to the 2024 Made in America Auto Index from American University’s Kogod School of Business, just three vehicles satisfy the 85% domestic content requirement: the Tesla Model 3 Performance, Tesla Model Y Long Range, and Tesla Model Y. This revelation was initially published by automotive news source FuelArc, which also highlighted the oddly precise nature of the 85% threshold. In comparison, various Ford Mustang models come close but fall short at 80% domestic content.

The policy’s clear favoritism toward Tesla has attracted attention, particularly considering CEO Elon Musk’s close relationship with President Trump. Musk was an outspoken supporter of Trump during the 2024 election and reportedly contributed $288 million to Trump and other Republican campaigns. Following Trump’s reelection, Musk has taken on responsibilities within the administration as a special government employee, assisting in the oversight of federal budget cuts under the Department of Government Efficiency (DOGE).

Nevertheless, Musk’s association with Trump has incurred some consequences. Tesla recently disclosed a 71% decline in profits, partly attributed to consumer backlash, protests, and boycotts. Numerous former Tesla customers — especially those with liberal views — have distanced themselves from the brand. Consequently, there has been a surge of used Teslas entering the resale market, with trade-ins hitting unprecedented levels.

While the renewed tariff policy could provide Tesla a short-term competitive advantage, it also highlights the escalating political connections between the company and the Trump administration — along with the potential dangers that accompany them.