Only Teslas exempt from new auto tariffs thanks to 85% domestic content rule (opens in new tab)

You can extend the "free market ideologues" to include more groups such as those who were very concerned about free speech for exactly four years from 2021-2024. Same people were concerned about politicization of justice department, but only when certain Presidents are in office. Same goes for "respect for constitution". "Family values" was abandoned quite a while ago.

Wilhoit’s Law has never been truer.

Such has been the US agenda in the developing world since the 70's. It's sort of odd to see them do it to themselves though. It's as if they became confused and started believing their own cover story.

Trump was never actually a "free market" idealogue. And the GOP officially dropped any mentions of it from their party platform a few years ago.

If anything, they are doing exactly what they promised. They were against globalism and elites and international agreements and governance and they are being true to their words.

Trump isn't a free market ideologue and never has been. I'm not sure what you expected. He didn't conceal his viewpoints; if you are surprised, I think you weren't paying much attention.

Trump has literally been prattling about his love of tariffs for decades and was explicit about his plans to heavily leverage tariffs during his campaign..

I think you might just want an excuse to believe what you already believe

Tariffs are antithetical to free markets.

Trump is in no way a free market ideologue and has made that very clear. Or are you talking about Elon?

What "free market" ideologues are you talking about? Seems like you're just intentionally making the hasty generalization fallacy (same one that leads to racism) to attack a group that you don't like for ideological or emotional reasons, especially because Trump was never a free market idealogue, and the tariffs are evidence of that.

Ideology is their sales pitch, it's for you and me to consume. It has nothing whatsoever to do with their goals and intentions. This has been true of Thatcher and her deeply protectionist policies all the way up to today with Trump and his tariffs. We're not choosing between regulations and no regulations, we're choosing between regulations that benefit the working class and regulations that benefit the owning class. (Although I suppose it could be argued that in the US you choose between regulations that benefit the owning class and regulations that benefit the owning class more)

Same. This era has exposed them as the shameless hypocrites they are.

It's hard to label Trump a free market ideologue. He's more Mr tarrif man.

If you want free markets look more to Lee Kuan Yew and Singapore (#1 on the "Index of Economic Freedom").

One of the virtues of proper free markets is the markets largely figure which companies win in a relatively non corrupt way, rather than politicians leaning on the scales.

Arguably, a similar problem exists for "big government" ideologues, except more severe.

https://fee.org/articles/10-crazy-examples-of-unrelated-wast...

It's not just the idea in isolation though. I don't think anyone would complain much if the rule was "in N mths the threshold is X". Everyone could do the necessary adjustments and play by the same rules. But if the rule applies immediately, favours the guy who gave you millions, and impacts the competition financially where they need to make me investments to comply with the rules... yeah, that stinks even if it looks like a generic rule.

Just a coincidence that the only company that currently fits the criteria is Tesla then.

Everyone else can start rearranging their supply chains and building new factories to comply. Easy peasy right? Be up and running in a few weeks, at most, right?

> where people say they're targeting specific companies and comments say "no, the rules are such than all companies over a certain size are covered".

The rules are written with full knowledge of the current market situation and the understanding that companies can't re-engineer their supply chains overnight.

The rule-writers had full knowledge about which companies would and would not immediately benefit from this rule. They wrote it accordingly.

This doesn't compare to the EU rulemaking discussion for that reason. If the EU rules were written so that only a single company was hit by the rule, people would be saying the same thing.

You can tweak the rules infinitely to get the outcome you want. It's suspiciously convenient how the only company that's exempt from those tariffs is owned by the guy that gave Trump $200+ millions during his campaign.

You can't argue in good faith about "well, that's the rule" when the rule was very obviously constructed that way to achieve this specific purpose.

US states do this frequently - for example, Texas often passes laws that stipulate "cities having a population over...." such that only the major cities have laws applied to them or certain companies having over employees/users/customers over a certain amount.

The key is the “…over a certain size” solely benefiting the richest man in the world, who just so happens to be heavily involved (despite no election) in the very government setting the policy and determining the size.

Context matters. In a vacuum, the 85% rule is fine. In reality, it excludes a single company whose CEO not only holds a position in the administration making the rules, but who clearly holds enough influence that the president himself shot a Tesla ad in front of the white house.

Given such visible conflicts of interest, the administration should be bending over backwards to dispel perceptions of impropriety. The fact that they aren't, and that these coincidences keep occurring, should be telling.

The question is why 85% and not 80%.

Remember when Oklahoma‘s requirements for a new school bible coincidently where only met by the Trump bible?

>If the rule is 85% domestic than any company can do it.

To be making this claim, you must be an vehicle supply chain expert, so can you tell the rest of us which parts can be domestically sourced in the US and which can't?

Also, why is the Model S is stuck at 80%?

Trump has been a pretty different politician (both in how he's talked but also what he's done) so I don't think it makes sense to view things he does slightly differently. Also the issue is less that a specific company is targeted but more that it looks like a personal political favor.

Not that your point is entirely invalid, just that I think the context is probably different (though I'm not sure exactly what EU comments you're referring to).

These are indeed both policies that involve thresholds and are therefore so similar that you can not argue for the one but not for the other.

> I'm not saying the tariffs are good. Only that their point is to get things made domesticly

...or to create massive stock market front-running opportunities with plausible deniability.

"But, but, Hanlon's razor!". Sorry, but at this level of responsibility, incompetence equals malice.

We fscking all have to live with the consequences. That includes those of us who could not vote for an alternative.

When you say EU rules, I guess it's the GDPR part on having the user data stay in the EU?

Otherwise I don't see any other rule that would ask the foreign company to move most of it's workforce and production capacity.

They search space for criteria is practically limitless. They have and would absolutely fish for precisely the criteria benefiting Musk. This playbook has been applied well by the crony capitalist class in the 3rd world, and is always a moving target. Most players know that and will not chase the moving target, knowing that another set of rules will emerge that will create new hurdles protecting the crony capitalist. A few will, and get burned.

There are two reasons to believe this is applicable here: 1. Trump has a track record of quid pro quos (Adelson being a salient example). Musk is definitely seeking his pound of flesh 2. Lutnick urged people to buy Tesla (shocking and explicit favoritism) The view that this is just incentivizing local production is naive.

Why 85% and not 80%? It’s an arbitrary cutoff that happens to benefit Elon.

Ford will quickly get to 85%, but you can’t deny this is yet again a move that is touted as “pro-America” yet somehow mainly benefits Musk (or Trump or someone in their orbit).

It's different when I like the rules.

My immediate assumption was that Tesla lies and probably has more offshore content than most of their competitors.

Interesting, does the proportion by weight, size, value or count? eg a EV battery could be 25% of the weight, 50% of the cost and 0.01% of the number of parts.

If the origins are so fuzzy, I guess other manufacturers would very soon adjust their part lists/part origins to avoid the tariff?

Then they would just change the rules so that only Tesla could be exempt from the tariffs.

I was expecting Hyundai to have a higher domestic content, actually. Culturally, they seem to prefer to be vertically integrated. I would expect something like the Santa Fe (produced in Alabama) to draw nearly all their parts from local partner and related firms (is "chaebol" an anti-trust term in the US?) and not import major parts like BMW does in Greer SC where engines are flown in on cargo 747s from Germany.

I won't say that NAFTA is dead, but supply and production lines were designed with the assumption the parts could cross the borders any number of times without paying duty. The WSJ looked at the Ford 10-speed transmission used in the F-150 and it apparently crosses the Canadian border at least 3 times, paying different duties each time depending on the content (machined aluminum casting, steel planetary gear sets, subassemblies, etc.)

My guess is that by imposing tariffs on Canada and Mexico, the government is intending to block the Chinese firms who are attempting to back-door their way into the US economy by building factories in the traditional maquiladora areas. Bold move, let's see how it plays out.

I wonder if/when (going from N to S) Canada, US, Mexico will form a "North American Union" (in the spirit of the European Union). 50 years? 100 years? never?

Current politics aside, I think: Canada and US have 'very much' in common (I'd risk saying (imho) 85% common 'stuff'). Canada, US and Mexico have 'plenty' in common (mostly Christian, capitalism/consumerism, way of life) (I'd risk saying (imho) 70% common 'stuff'). Once Mexico sorts out this 'minor' (cough-damn!!!-cough) problem (mass graves, decapitated and/or missing students, murder of anyone that doesn't want uncontrolled drug trafficking, etc.) this idea could start becoming a reality.

> The change will allow carmakers with US factories to reduce the amount they pay in import taxes on foreign parts, using a formula tied to how many cars they sell and the price.

Tesla has been one of the best selling car across the world. I don’t think it’s just the parts alone.

There seems to be a (largely American) misconception that people in positions of power are there because they earned such a position through being capable and competent.

Most people in power lack critical thinking skills, having earned their position primarily due to the circumstances of their birth and the people they know.

It is incredibly rare for someone who is competent enough to weild such levers of power to be granted access to them.

Most people feel like hapless midwits, and we know that most of us actually are. Yet we have this tendency to assume, for some weird reason, that people in important positions have their shit together more than we do. Only in emergencies and times of crisis do we see that no one has their shit together. When we see that, we want to blame it on conspiracy or some sort of 5-dimensional chess being played, because it goes against the safe notion that someone, somewhere, is steering the boat (even if we don't like where they're taking us). But the safer bet is that no one is steering, and no one actually can steer, and that it's incompetence all the way to to the top.

Mentioned it a few times in the past, but this is just a big freak out and America having a hard time squaring the fact that by almost all meaningful metrics, their "enemy" has taken the lead. Nobody really knows how to fix it, everyone at the top knows they can't really do much about it, but they have to show "power", because that's all they have left. Nobody wants to "lose" in public's eyes, but that's just how some of the world is starting to think.

Honestly, I feel kinda conflicted. From one point, I always looked up to the American values, and way of life. But it's becoming increasingly misaligned with my own values and the things I find important in life.

Why aren't you assuming the opposite -- that these mythical levers don't actually exist?

>now have actually no idea what to do now that this kind of situation has happened

They know what they would do, if this were under any other president: make phone calls, write editorials in major newspapers, start donating to future political rivals.

But this is Trump. He's surrounded by equally corrupt lackeys, and immediately fires anyone showing a shred of morality. The entire federal government does his bidding. He sues news media until they settle with him for millions, signs executive orders banning specific law firms from working with the federal government until they offer him millions in legal services, cuts off money from states that dare defy his will, and demands universities let the federal government investigate all staff in Middle East studies. Any business leader who stands up to him will be crushed. The best way to keep making money is to get on his good side, like Elon.

This is literally tyranny. Thank goodness there are plenty of judges willing to stand against the obviously illegal acts.

> I am kind of surprised that the collection of people at the tops of all the big companies commanding so many billions, don't have some sort of behind the scenes levers they can pull to make him squeal like a pig, elected office or no.

The "US is an oligarchy, the corporations are in control" was always a false narrative.

You're so wedded to your overly simplistic and conspiratorial worldview that everything is a secret plan by "the elites", that now you've had to invent a new conspiracy about how they all had a secret plan to lose themselves billions of dollars.

Sometimes a stupid guy gets elected by low-information voters, and enacts stupid policies that crash the economy. There isn't any secret illuminati meeting where they can tell him to stop.

I'm guessing American cars are more unreliable and might break down before they manage to deliver the fentanyl.

You're not wrong to raise an eyebrow here — the connection between fentanyl and imported vehicle parts isn't exactly intuitive. Let's unpack this.

Fentanyl is smuggled into the country with foreign auto parts, obviously.

No, tariffs are meant to bring manufacturing to the US. The whole fentanyl thing was just with Canada and Mexico as negotiating tool.

Let's stop about this fentanyl lie. Even Donald laughs that the world has believed that

nobody said winning the war on drugs was gonna be easy

The tariffs cover parts as well as whole vehicles. The thing announced here is that they'll have a rebate program if the car is 85% manufactured in the US, and the rebate will be in effect for 2 years. So you still pay the tariff on parts, but you get some or all the money back if you meet that threshold. The idea being that it gives the company two years to move their parts manufacturing or sources. But the threshold is so high that only Tesla gets to enjoy the rebate, not any other company.

It seems to be about a tariff rebate on imported parts.

The article is really bad. Even the original source is just an off-hand comment from Lutnick, not the final regulation.

The idea is that automakers will get special exemptions from the tariffs for what they do import.

Handing out tariff exemptions was one of the red flags people were raising during this process. It becomes a lever the administration can pull to grant favor to specific companies. Everyone else suffers.

"US automakers will receive credit up to 15% of the value of vehicles to offset cost of imported parts" https://www.teslarati.com/tesla-sec-lutnick-cars-85-percent-...

> The auto factories fled Flint/Detroit due to the UAW basically an attempt to limit the scope of strikes and violence from the UAW.

That is the story the auto companies like to tell, to make unions look damaging to workers and communities. From what I've read, the migration had a lot to do with race. But regardless, do either of us have any evidence to share? (not me right now)

In the long run, unions can be blamed for this whole Trump Presidency.

Biden was pressured by unions to snub Tesla at the EV summit. This personally offended Elon, who then went to support Trump with all sorts of tactics including buying Twitter to amplify his voice.

That was yesterday's narrative, keep up! Now tariffs were a plan to pressure our allies to renegotiate their trade deals with us in our favor, and that worked great! (According to the white house (Also forget that not a single deal was made)).

Oops! Scratch that, now that China won't back down on their retaliatory tariffs, they were always a tool to make China "fall back in line" or something. Yeah, destroying our own economy ought to teach them a lesson.

This shit is so transparent, I'm amazed as to how 30% of the country can still endorse this clown and his circus. My mental image of the average republican voter is now that of a toddler trying to fit a square into a circle hole while drooling on themselves.

> how does this encourage a shift to domestic manufacturing?

It doesn’t. Trump is clearly trying to negotiate these tariffs away. So they don’t incentivise moving production. Just taxing everyone but Musk.

I would be surprised if Ford does anything drastic with their supply chain. Probably just wait this out. POTUS is going to be stripped of this ridiculous tariff "power" one way or another.

* Bogus emergency is up for review

* Congress discussing stripping power

* Constitutionality in question

* Public going to to bury them in the midterms if this keeps up

Most of this pantomime is also illegal or unconstitutional. For example you can't pass a law or regulation that targets one person or entity. But it'll take a long time to litigate everything because the DoJ and congress have been rooted.

I see them quite frequently where I live, usually covered in a vinyl wrap advertising some local business or other.

> Not going to change the buying market.

Price changes absolutely change the buying market. What a weird thing to say. A lot of people will never buy a Tesla, a lot still will (they delivered 300k+ vehicles in Q1). The ones who still will buy will also consider the price.

Those people will buy and own exactly what they deserve.

They can qualify because unlike most automakers they do actually have significant investment in their own battery supply-chain.

Tesla produces most of their batteries in Nevada.

It’s not corruption it’s just paying back for the votes Elon bought with this 1 million a day program on swing states.

Uhm, wait a moment.

It appears that the American Automobile Labeling Act measures domestic content on a value basis (that is, the amount the manufacturer pays the supplier for it):

https://www.nhtsa.gov/part-583-american-automobile-labeling-...

Yes.

Used cars respond to market forces too.

If new cars become much more expensive, used cars will become much more expensive. This isn't even a theoretical idea. The exact thing happend in 2020-2021 when you couldn't buy a new car.

This is what many don't understand about tariffs in general: you put tariffs on foreign goods and anything exempt will simply raise their prices to match.

That suggests an ecosystem may appear around making new goods "used" enough to meet some legal definition.

Are you saying if I import a used car, I don't have to pay tariffs? Factory delivery programs would become a lot more popular.

Or are you just saying that if I buy a car that's already in the US and has already had any import tariffs due at time of import paid, I won't have to pay them again? That's a lot less interesting.

It blatantly is, and the responses to you pointing that out are insane.

Deflection, whataboutism, sealioning with a side of demanding sources for what is essentially the use of a greater than sign.

It is but it always has been. I would also appreciate if the big 3 American car companies had 85% American content.

What should we call it when the other side does things in the opposite direction? https://www.seattletimes.com/seattle-news/politics/wa-legisl...

Punitive legislation? Lawfare? Crony capitalism but for the other companies?

Climate change, science, and the environment are indeed valid reasons (as was plainly stated at the time) for subsidies to electric cars (amongst hundreds of billions of dollars of other environmental subsidies Democrats passed). The CEO spending hundreds of millions of dollars to curry favor with the ruling party, which is almost certainly the reason this specific number was chosen, is not.

Tesla's success/threat pushed traditional automakers to actually build EVs at scale. It convinced consumers that EVs are viable and kickstarted charging infrastructure. The left accomplished its goal even if it probably would have preferred Elon not go all Kanye on us.

i think it’s more than irony. why would the government—irrespective of party—give him billions in refundable credits for over a decade? remember paypal was also an in-q-tel investment? “boring company” to connect DUMBs. starlink for the control grid. spacex to deploy it. tesla as the self-driving AI slam-dunk (windows update car is another control grid). the government has been heavily invested in elon long before donald trump got political. why? with the kind of budget the CIA has, you could make anyone seem as though they had “the midas touch.” name one of your kids “damien” and dress up like the antichrist. the devil has an army. the pentagon points south (down). we ponder our next pleasure as the innocent are slaughtered with our energies, with our tacit approval.

> This headline is misleading because it makes it seem like tariffs are a step function that activate below 85%, which isn't true.

> The formula is a simple, linear equation: tariffs = 0.25 * MSRP * (percent foreign content - 15)

Um... unless I'm missing something, agree it's not a if/then rule, but in practice, that's exactly how the formula works?

84% domestic = 16% foreign = 0.25 * MSRP * (16-15) = 25% tariff on 1% of MSRP

85% domestic = 15% foreign = 0.25 * MSRP * (15-15) = 25% tariff on 0% of MSRP - which is nothing

86% domestic = 15% foreign = 0.25 * MSRP * (14-15) = 25% tariff on -1% of MSRP - but let's assume the Gov't isn't going to pay companies so effectively 0% again

So yes, it's a tariff that effectively activates below 85% domestic content.

What I personally find more interesting is that they consciously did not choose a more conciliatory number ( like 80 ), which would capture more cars and have the benefit of being able to deflect attacks. Almost like it was intended to cause uproar.

Otoh, I listened to conservative ratio the other day and the general tone was "good, he is making them mad and he doesn't care."

One of those was to promote EVs built with union labor. They only invited the companies with the largest union workforces.

The other EV meetings organized by the Biden administration were all specifically about EVs in the context of specific legislation the administration was proposing, and they only invited companies that were supporting that legislation.

It's also quite telling that this gets attention and rampant cries about the oligarchy and cronyism, but not a peep about:

> New York state lawmakers have launched an effort to shut down Tesla’s stores in the state

From: https://electrek.co/2025/04/28/ny-lawmakers-shut-down-teslas...

> WA Legislature considers new tax aimed at Elon Musk’s Tesla

From: https://www.seattletimes.com/seattle-news/politics/wa-legisl...

"For my friends? Anything! For my enemies? The law [and new taxes]!"

They probably include Mexico, add that and Tesla is above 85% according to that list.

Tesla builds Model 3s and Ys in their Shanghai factory using almost entirely domestically sourced components, and even exports a fair number from there. But perhaps the trade war will reduce demand.

How long do you think that 5% will take them?

That we should be so lucky. Chinese Central planning actually gets useful stuff done, little hope of that from this lot

> I didn't see any of this whingeing when Biden was making EV incentives that blatantly excluded Tesla.

Examples?

Here are the EV incentives that I'm aware of that happened during the Biden administration.

• $7500 tax credit for qualifying vehicles. It only applies to cars below a certain MSRP which disqualified the Tesla Models S and X, but that same limit excluded many other cars from many other companies too. The rest of Tesla's models have many configurations below the MSRP cutoff that did qualify.

There were also rules on battery materials sourcing, which disqualified about 80% of the EVs that were then available in the US. Those did hit some specific trims of the Model 3 for a few months but Tesla was able to switch to using the same batteries that the unaffected Model 3 trims used, restoring the credit.

• The National Electrical Vehicle Infrastructure (NEVI) program, which provided grants for building EV charging infrastructure. Tesla qualified and received considerable money from NEVI grants.

• There were some grants specifically intended to boost EV manufacturing with union workers. Tesla does not have any unionized plants so was de facto excluded.

• There were grants for building a network of EV truck charges. Tesla submitted a project proposal but it was not accepted.

What else was there?

Tesla [...] losing $15.3 billion in brand value: https://brandfinance.com/press-releases/toyota-is-the-worlds...