Mar 27, 2025, 03:52 PM | Updated 03:52 PM IST Save & read from anywhere! Donald Trump and Elon Musk Tesla is set to gain a competitive edge as President Donald Trump’s new 25 per cent tariffs on foreign-made vehicles take effect, reported New York Times. While the move threatens to significantly increase costs for automakers relying on overseas production, Tesla’s domestic manufacturing base in California and Texas largely shields it from the impact. Unlike competitors such as Hyundai, Volkswagen, and General Motors, which import a substantial number of vehicles, Tesla manufactures all of its US-sold cars domestically. This means that while rivals face sharp cost hikes, Tesla’s vehicles remain unaffected by tariffs on finished cars. Tesla’s Model Y SUV and Model 3 sedan, the two bestselling electric vehicles in the US, already enjoy a dominant position in the EV market. Now, with competitors like GM’s Chevrolet Equinox EV and Ford’s Mustang Mach-E—both manufactured in Mexico—becoming significantly more expensive, Tesla could further consolidate its lead. The tariffs will hit foreign and US automakers that rely on imports, including Hyundai, Toyota, and German luxury brands like BMW and Mercedes-Benz, which ship hundreds of thousands of vehicles to the US annually. However, Tesla is not entirely immune to the tariff impact. While its vehicles are assembled in the US, key components such as batteries, motors, and electronic parts are imported, particularly from China. These parts will be subject to tariffs, raising Tesla’s production costs. The company will need to decide whether to absorb these additional costs or pass them on to consumers through higher prices. For now, Tesla remains the least affected major automaker, as noted by CFRA Research analyst Garrett Nelson, who called it the “least exposed” company in this scenario. Despite Tesla’s strategic advantage, Trump denied that Elon Musk had any influence over his tariff decision. Speaking at the White House, he stated, "He's never asked me for a favor in business whatsoever".