President Trump urged Tesla CEO Elon Musk and his Department of Government Efficiency to use a “scalpel” and not a “hatchet” for agency cuts and firing thousands of American government workers. This approach seemingly does not apply to his tariff policies, which have smacked the auto industry like a hatchet. U.S. auto brands are now adjusting their plans to minimize the impact from the fallout. So far, nobody is really winning.
Welcome back to Critical Materials, your daily round-up of news and events shaping up with the world of electric and electrified vehicles. Also on our radar today: China assures Tesla that it is not attempting to single out American companies that do business in the country as a part of its retaliation against America’s tariffs. Plus, Republicans’ plans to end California’s gas car ban hits a major hurdle in the Senate.
30%: Auto Industry Grapples From The Tariff Blitz
Much of what President Trump said during his tariff announcement last week was true. Over several decades, the U.S. has offshored millions of manufacturing jobs. Offshoring to countries like China and Mexico allowed American companies to benefit from cheap labor, while still satiating American consumers’ appetites with high-quality goods.
According to an estimate by the non-profit Coalition for Prosperous America, the U.S. lost over 3 million jobs to China since 2001 and during that time, its trade deficit ballooned. A report from the Economic Policy Institute says that this has hurt certain groups, such as Black and Hispanic communities in the U.S., more than others.
But slapping tariffs overnight to force companies to build in the U.S. seems to be doing more harm than good. And the freedom of mobility that Americans love and value so much, by purchasing millions of cars every year, will now come at a higher cost as automakers readjust their plans to minimize the fallout. In many ways, the tariffs are backfiring.
Stellantis has already laid off 1,000 U.S. workers at its Michigan and Indiana plants and shuttered two production lines, one in Canada and one in Mexico. For much of April, Jeep won’t be producing the newly launched electric Wagoneer S and the production of the electric Dodge Charger Daytona is also paused.
Audi, which makes all its models in Germany and the Q5 in Mexico, is holding its vehicles at U.S. ports. Volkswagen, too, has halted imports of the Jetta, Taos Tiguan SUVs, which are made in Mexico.
Here’s more from Automotive News:
Likewise, Infiniti paused production of two Mexico-built crossovers for the U.S. market. In an April 3 retailer memo, Infiniti Americas Vice President Tiago Castro said QX50 and QX55 output bound for U.S. dealerships is halted “until further notice.”
Other automakers detailed plans to increase U.S. output in response to the tariffs. Nissan, which had planned to terminate a shift at a plant in Tennessee, reversed its decision because of the tariffs, with the goal of keeping Rogue crossover supply flowing.
Mercedes-Benz, meanwhile, is considering shifting production of another model to its Tuscaloosa, Ala., assembly plant. General Motors is boosting production of Chevrolet Silverado and GMC Sierra pickups at a plant in Indiana.
While Mexico is still negotiating with the White House, Canada and China are not having any of it. Both countries have retaliated with identical tariffs. The European Union is on the verge of retaliating on Trump’s steel and aluminum tariffs, too, with countermeasures expected this week.
Toyota, Honda, and Hyundai, meanwhile plan to hold prices steady until there’s more clarity. And Ford and Stellantis are even offering discounts. But some special edition Mustangs and Raptor and Super Duty trucks won’t be eligible for discounts.
60%: China Assures Tesla Amid Growing Trade Tensions
Beijing retaliated against Washington’s policies with an identical 34% tariff on all imported goods from the U.S. Chinese officials held a roundtable with executives from some 20 American companies that have businesses in China, to convey the message that the retaliatory tariffs are for the U.S. to “return to the right track.” They’re not meant to target American companies specifically.
Tesla was also part of this discussion. The automaker’s largest plant is in Shanghai and that gigafactory is central to its global operations, shipping EVs to several markets in Europe and the Asia-Pacific region.
Here’s more from Nikkei:
In a rare move, Ling urged the American executives to understand the root causes of the trade war, clarify the impacts and react with “rational voices” in order to maintain stability in global production and supply chains. The vice minister pledged that the ministry would “protect” foreign-funded enterprises in accordance with the law, and that China “has been, is, and will be an ideal, safe, and promising investment ground for foreign investors.”
The inclusion of Tesla stood out. The electric vehicle manufacturer, which helped plant the seeds of China’s growing EV ecosystem, is led by Elon Musk, one of Trump’s closest allies. Despite Musk’s proximity to the president, the automaker had previously warned that it feared being caught in the crossfire of tariff retaliation.
Despite Musk’s close relationship with President Trump, Tesla won’t be excluded from the tariff fallout. “Important to note that Tesla is not unscathed here. The tariff impact on Tesla is still significant,” Musk said in a post on X last week.
90%: Republicans Face Hurdles In Ending California’s Gas Car Ban
Electrify America Flagship Indoor Charging Station In San Francisco, California
Republicans’ efforts to stop California from banning gas-powered vehicles in the state by 2035 ran into a major hurdle in the U.S. Senate.
In December, the Environmental Protection Agency (EPA) approved California’s Advanced Clean Cars II regulations under the Clean Air Act. California’s regulations, adopted by 11 other states, require automakers to begin selling a gradually higher percentage of EVs and electrified vehicles from 2026 onwards. By 2035, sales of combustion-powered vehicles will be phased out.
As soon as President Trump took office in January, Republicans have been trying to thwart these efforts. But the Senate isn’t allowing that. Not yet, at least.
Here’s more from The New York Times:
The parliamentarian, Elizabeth MacDonough, is a civil servant who acts as the arbiter and enforcer of the Senate’s rules. She decided that the rules would not allow Republicans to fast-track the repeal of the waiver.
Mr. Schiff noted that the parliamentarian is “nonpartisan and independent,” and added that California “has been the gold standard for fighting harmful air pollution, and today’s ruling allows that fight to continue.”
California and the 11 other states that have adopted its regulations accounted for half of U.S. auto sales in 2024. Banning gas-powered vehicles would mark a seismic shift for the industry. It’s also a win for climate and a positive step in helping reduce America’s carbon emissions.
100%: Should California’s Gas Car Ban Continue?
California has the authority to set stricter emissions standards on top of the federal regulations. Historically, it has been the state that pollutes the most. Much of that can be attributed to its geography which is more susceptible to smog and wildfires. But vehicular pollution makes it worse. Now the state wants 100% of its vehicles to be fully electric, plug-in hybrid or hydrogen-powered by 2035.
Do you support this ban? How do think would it impact the EV market and consumer choices? Leave your thoughts in the comments.
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