The global economy is facing one of the most tense moments in its history, following the implementation of the new US tariff policies that have written off free world trade. Reciprocal tariffs have not only rekindled fears of a global recession, but have also hit some of the world’s most innovative companies hard. Among those most affected: Elon Musk, whose companies will be hit hard by the trade war that the US has started with China and the EU.
Elon Musk does not like tariffs. Elon Musk has made his opposition to the new tariffs promoted by Donald Trump absolutely clear. Over the weekend he proposed a trade agreement of “zero tariffs” between the United States and Europe. In addition, Musk shared on Twitter a video of economist Milton Friedman highlighting the benefits of free trade and criticized Peter Navarro, Trump’s trade adviser and chief ideologue of Trump’s tariff policies, claiming that “Navarro is dumber than a sack of bricks.”
According to The Washington Post, which published the story, the confrontation between Musk and Navarro has been escalating. Musk has publicly denounced these policies as harmful, not only to his companies, but also to the US economy in general. These statements show the distance between Musk and the Trump administration.
Tesla is more than an assembler. The origin of the exchange of insults between Musk and Navarro was a statement in which the White House economic adviser claimed that Tesla was little more than a parts assembler. Tesla is among the companies most affected by tariff policies. According to Nikkei Asia, between 20% and 25% of the components used in the manufacture of Tesla cars are imported, while 40% of the materials related to the battery electric vehicles come from Chinese suppliers, although these batteries and their cars are manufactured in the US gigafactories.
However, the main stumbling block for Tesla is not the extra cost of its supply chain due to tariffs, but the tension generated with China, where the brand enjoys a privileged position and Musk had been acting as a mediating bridge. If the Chinese government intensifies its offensive against US commercial interests, the competitiveness of Tesla against BYD or other manufacturers could be put in check. “It is important to note that Tesla has not emerged unscathed from this problem. The impact of tariffs on Tesla is still significant,” Musk published a few days ago.
Tariffs on space: their effect on SpaceX. SpaceX has also felt the blow of tariffs on its flesh. Restrictions on exports from China and tariffs on China are a serious obstacle in the supply chain of the company. “Tariffs are creating challenges in various facets of SpaceX’s operations, including supply chain costs, international contracts and the regulatory environment,” Maxime Puteaux, senior advisor to the space consultancy Novaspace, pointed out to Forbes.
This problem could have long-term consequences. On the one hand, they affect SpaceX’s ability to fulfill international contracts, including those for the deployment of satellites for Starlink. On the other hand, these increases could slow down and even jeopardize the development of projects such as Starship, a key piece for future missions to Mars. Musk has warned that these types of trade policies jeopardize US technological leadership in strategic sectors such as aerospace.
“There are certain components or elements used in the construction of high-tech products like SpaceX that don’t have many alternative suppliers, so the risk of concentration is exacerbated when costs increase exponentially,” James Gellert, executive chairman of supply chain analytics firm RapidRatings, told Forbes Magazine.
Not even AI is spared. Nor is AI spared from the scourge of tariffs, so xAI, Musk’s growing artificial intelligence company, also faces some problems due to tariffs on key components such as electrical equipment and servers for its data centers.
These increased expenses not only affect the company’s competitiveness, but could also limit its ability to take on international rivals in the field of artificial intelligence, a sector in which China and Europe are advancing rapidly.
Collateral damage from tariffs on X. In the trade war caused by tariffs, even X, a company that in theory should not be affected because it only offers online services, will suffer the collateral damage from the economic crisis that economists predict.
One of the main sources of income for X is advertising. The economic difficulties of companies can make the company suffer much more from the lack of advertisers. In addition, X’s social network is much more exposed to indirect retaliation from the affected countries, which could tighten their policies on privacy and data protection, an issue that is already being investigated by X in Europe, as published by The New York Times.
