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By Theo Burman
Live News Reporter
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President Donald Trump's latest tariffs on Mexico, Canada, and China could have big ramifications for one of his closest political allies: Elon Musk.
The move, which prompted tariffs on U.S. trade into Canada in retaliation, could affect the supply chains that Musk's technology companies, most notably SpaceX and Tesla, rely on.
Newsweek contacted Musk through Tesla for comment on how the policy would affect his companies via email.
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Why It Matters
Trump and Musk have been close allies for the last year, and the billionaire businessman plays an important role as the president's advisor and head of the Department of Government Efficiency. However, Musk takes the health of his largest tech companies extremely seriously: any damage done to his automobile company Tesla and private space tech company SpaceX as a result of Trump's tariffs would be the first real test of their friendship.
However, in some cases, Musk stands to potentially gain from the tariffs, as restrictions on electric vehicles from China clear the way for Tesla, the largest producer of EVs in the U.S. to continue its dominance of the market without competition.
What To Know
Trump announced the U.S. would place a 25 percent tariff on imports from Canada and Mexico, along with a 10 percent tariff on imports from China.
Canada responded immediately, with Prime Minister Justin Trudeau saying his government would introduce retaliatory 25 percent tariffs on more than $100 billion in U.S. goods.
This means that supply lines that involve moving goods from Canada, the U.S.'s largest trading partner, will become more expensive.
How Trump's Tariffs Impact Tesla
In a financial results report from 2024, a spokesperson for Tesla outlined how potential tariffs might affect Tesla.
Tesla's Chief Financial Officer Vaibhav Taneja said in the earnings call: "There's a lot of uncertainty around tariffs. Over the years we have tried to localize our supply chain in every market but we are still reliant on parts from across the world for all our businesses.
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"Therefore the imposition of tariffs, which is very likely, in any capacity will have an impact on our business and profitability."
Tesla is reliant on trade with China for battery parts, with Chinese companies BYD and CATL both providing Tesla with electric vehicle battery cells.
How Trump's Tariffs Impact SpaceX
Thales Alenia Space, a European company, is one of the largest providers of pressurized modules to the U.S., could be affected by any tariffs placed on the European Union, which Trump has said is a possibility.
The U.S. space industry is reliant on the import of steel, aluminum and electronics, all of which come in large supply from China, Mexico, and Canada.
SpaceX is responsible for several major contracts with NASA, including long-term plans to manage the controlled crash of the International Space Station, meaning any impact on its supply lines could lead to issues in U.S. space activity.
How Trump's Tariffs Impact Musk's Other Companies
Musk's other companies would be less affected by tariffs imposed by either the U.S. or its trading partners. Digital service companies, such as X (formerly Twitter) and Neuralink, already have an established infrastructure, and the services they provide are not subject to the industries the tariffs apply to.
For Musk's infrastructure tunnel firm The Boring Company, which relies on construction supplies but does not need as reliable supply chains as Tesla and SpaceX, the impact of the tariffs is not yet clear.
What Happens Next
Trump has indicated that future tariffs on the EU and the U.K. could be on the way. The full impact of the retaliation from Mexico and China has not yet been made clear.
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