Model S and X sales get switched off in China thanks to tariffs, even as Elon Musk's EV maker loses ground in the U.S.
Tesla builds both of these models in the U.S., which makes them subject to China’s newly announced 125% tariffs on U.S. imports; Beijing’s announcement came in response to the Trump administration’s decision to boost effective import taxes on goods from China to 145%.
The escalating tariffs form yet another roadblock for Tesla. Its year-over-year sales in China were already down 11.5% in March, even with a lift from the debut of the company’s revamped Model Y, as competitors (including BYD (BYDDY)) gained significant ground.
On the upside, Tesla has a factory in Shanghai that makes its Model Y and 3 vehicles, both of which are more popular in China than the S and X, per Bloomberg.
Tesla is also struggling to compete in Europe; in January, as CEO Elon Musk’s role in the second Trump administration grew clear, Tesla’s sales cratered 44%, according to one third-party report. A subsequent report found that Tesla’s sales in Europe dropped again in February. Despite Musk’s close ties with Trump, the billionaire CEO has criticized U.S. tariffs on Europe, where Tesla faces increasing competition from Chinese and European EVs alike.
Things haven’t looked so hot in the U.S., either. A new Kelley Blue Book report concluded that Tesla’s sales in the U.S. declined “nearly 9%” year-over-year in the first quarter of 2025, while overall EV sales in the U.S. grew 11%. The report added: “Without a significant shift in product strategy, Tesla will continue to shrink in the U.S. market.”
Tesla was down about 1% as of 3:15 p.m. ET on Friday. Since January 1, the stock has tanked about 34%.
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