Elon Musk’s Tesla shares concerns over impact of Trump’s escalating trade war

Tesla is warning it could be hit hard if the US is handed retaliatory tariffs amid Trump's escalating trade war.

Elon Musk's Tesla is warning it could be exposed to the tough taxes that the US' trading partners inflict on the country in retaliation to President Donald Trump's tariff measures.

This week, Trump announced 25 per cent tariffs will apply to goods coming into the country such as steel, aluminum and alcohol from Canada, Mexico, China and the European Union - which has sparked significant backlash from the partners.

Trump became the proud owner of his first Tesla this week (Andrew Harnik/Getty Images)

Canada said it would roll out its own counter-tariffs on US goods, while the EU went a step further by announcing a 50 per cent tariff on whisky.

The POTUS is also currently considering imposing tariffs on vehicles and car parts that come from around the world next month.

While the President maintains the tariffs would boost jobs and the American economy, there are fears among several industries, from agriculture to retail, that retaliatory measures could have a detrimental effect - many of which could leave American consumers footing the bill in areas like their groceries.

Now, the electric carmakers have spoken out by issuing a letter to the US Trade Representative's Office on Tuesday (March 11), reports Reuters, that indicates Tesla is one of many US businesses concerned by the trade war.

Tesla is one of several US companies appealing to the President to avoid retaliatory tariffs (Smith Collection/Gado/Getty Images)

It said it is important Trump's trade talks do not 'inadvertently harm' American companies and stressed it wanted to avoid retaliation that happened in the past, which saw increased tariffs on electric vehicles imported abroad.

"U.S. exporters are inherently exposed to disproportionate impacts when other countries respond to U.S. trade actions," the letter stated. "For example, past trade actions by the United States have resulted in immediate reactions by the targeted countries, including increased tariffs on EVs imported into those countries."

The automaker also said 'certain parts and components' are made outside the US and even with an injection of support in the domestic supply chain, could still be 'difficult or impossible to source' within the country.

Trump and Musk outside the White House this week where several Tesla's went on display (Andrew Harnik/Getty Images)

Instead, Tesla urged for a 'phased approach' to help such companies 'prepare accordingly and ensure appropriate supply chain and compliance measures are taken.'

"As a U.S. manufacturer and exporter, Tesla encourages USTR to consider the downstream impacts of certain proposed actions taken to address unfair trade practices," the letter concluded.

Tesla is not the only company to express anxiety about the matter, with Autos Drive America, representing Toyota, Volkswagen, BMW, Honda and Hyundai, warning 'broad-based tariffs will disrupt production at U.S. assembly plants."

The trade group added: "Automakers cannot shift their supply chains overnight, and cost increases will inevitably lead to some combination of higher consumer prices, fewer models offered to consumers and shutting down U.S. production lines, leading to potential job losses across the supply chain."

The news comes as Trump appeared to show support for Musk and Tesla's plummeting value this week by saying Tesla vandals will be hit with 'domestic terrorism' charges while purchasing his own red Tesla Model S.