Tesla is urging the Trump administration to exercise caution when imposing tariffs on foreign-made chips.
As PCMag reports, in a letter to the Commerce Department, Tesla encouraged officials to consult the industry before issuing tariffs on semiconductors, citing potential supply chain disruptions. One Tesla product alone “may contain tens of thousands of semiconductors, with subcomponents made by hundreds of suppliers, in hundreds of manufacturing locations around the world,” it says.
“Establishing one semiconductor fabrication facility requires at least four years and billions of dollars,” the letter adds. “Given this scale and the importance of the semiconductor industry to US economic success, coordination between government and industry is crucial. “Several trade actions have already impacted some of these supply chains,” Tesla says. “Even temporary uncertainty in US policy in these sectors can cause long-term impacts.”
Tesla refrained from directly opposing tariffs on foreign-made chips. Instead, it urged the White House to focus on “pro-growth measures to boost domestic industries and investment and tailoring any potential trade-restrictive actions.” Tesla CEO Elon Musk – who has just left his role with DOGE in DC to focus more on his businesses – is a major supporter and political ally of President Trump. However, he recently told investors he’s been advocating for lower tariffs.
Meanwhile, one of Tesla’s main chip suppliers, TSMC, sent its own letter to the Trump administration, warning that any plan to tariff its foreign-made chips could derail the company’s $165 billion investment to build new fabs in Arizona.
Tesla’s letter adds that the Trump administration should avoid “stacked” tariffs that could hit semiconductors with more than one duty. Although Tesla was able to navigate 2021’s chip shortage by leveraging its in-house software and engineering, the company still notes it remains dependent on partners across North America, Europe, Africa, and Asia.
“These partnerships allow us to focus on increasing US dominance in advanced manufacturing,” Tesla says. “Impacts to these inputs for which there is insufficient domestic availability will put a strain on resources during a key moment in the global artificial intelligence race.”
Numerous companies and trade groups also weighed in on the potential chip tariffs after the Commerce Department solicited public comments. A key goal of such tariffs is to push companies to bring semiconductor manufacturing to the US. But the Entertainment Software Association (ESA), which represents video game companies, also warned of the short-term impacts of the tariffs, saying: “There is currently a lack of semiconductor sourcing alternatives in the United States.”
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