Trump Adviser Slams Elon as 'Car Assembler' Over Tariff Dispute, Sparking Backlash from Tesla CEO

The battle over tariffs and trade is heating up in the United States, and this time it's Tesla CEO Elon Musk who finds himself at the centre of the storm. Following his recent comments calling for 'zero tariffs' between the United States and the European Union, senior Trump adviser Peter Navarro launched a scathing critique of the billionaire entrepreneur—labelling Musk not as a manufacturer, but merely a 'car assembler'.

The remark, delivered during a CNBC interview earlier this week, reignited longstanding tensions around Donald Trump's tariff policies and their impact on American businesses. Navarro's comments are the latest salvo in a series of internal feuds triggered by Trump's global reciprocal tariffs, particularly as the former president seeks re-election.

'He Wants the Cheap Foreign Parts'

Navarro, who previously served as Director of the White House National Trade Council, did not mince words. While acknowledging Musk's contributions to improving governmental efficiency, Navarro dismissed his credibility on trade matters.

'When it comes to tariffs and trade, we all understand in the White House – and the American people understand – that Elon is a car manufacturer, but he's not a car manufacturer. He's a car assembler,' Navarro said, citing Tesla's reliance on parts from countries such as China, Japan, and Taiwan.

'He's a car person. He does that, and he wants the cheap foreign parts,' Navarro added, clearly implying that Musk's vested interests were driving his opposition to tariffs.

The billionaire's controversial comments had been made during a video appearance at a conference hosted by Italy's right-wing League Party. Musk advocated for a trade agreement between the EU and the US that would result in 'zero tariffs', describing it as the ideal route to a true free-trade zone.

Kimbal Musk Weighs In

Elon wasn't the only Musk to weigh in. His younger brother Kimbal Musk, a restauranteur and entrepreneur, came to his defence and criticised Trump's tariff strategy. In a post on X, the platform owned by Elon, Kimbal called tariffs a 'permanent tax to the American consumers'.

'Even if [Trump] is successful in bringing jobs on shore through the tariff tax, prices will remain high and the tax on consumption will remain in the form of higher prices because we are simply not as good at making things,' he wrote.

Elon Musk himself responded by mocking Navarro's academic qualifications. 'Having a PhD in Economics from Harvard is more of a liability than an asset,' he posted on X, responding to Navarro's weekend interview with CNN in which he predicted a dramatic rise in the stock market. Navarro suggested the Dow Jones Industrial Average could reach 50,000 during Trump's next term—a bold claim, considering it currently hovers around 38,200.

Tesla's Global Supply Chain

Navarro's criticism centres on Tesla's international supply chain—a structure that is both complex and necessary for the company's operations. Roughly 40% of Tesla's battery supply chain materials come from Chinese firms, including Ganfeng Lithium and Zhejiang Huayou Cobalt. In recent years, Tesla has sought to diversify its suppliers, turning increasingly to Indian companies.

In 2022, Tesla imported over £784 million (USD 1 billion) worth of components from India and planned to nearly double that figure in 2023, targeting between USD 1.7 billion and USD 1.9 billion. Companies like Tata AutoComp Systems, Sona Comstar and Bharat Forge now provide essential parts such as differential systems and wheel hubs. Meanwhile, Tesla's Model S and X vehicles rely on battery cells imported from Japan, which are assembled into battery packs in California.

This extensive global sourcing, according to Navarro, undermines Tesla's claim to being a purely American carmaker. Yet others argue that such diversification is vital in today's interlinked manufacturing environment.

Tariff Impact on Tesla's Business

Tesla has already felt the sting of Trump's tariff policies. The 25% tariffs on imported components have driven up production costs for the company, forcing it to absorb higher expenses even for domestically manufactured vehicles.

'Tesla is NOT unscathed here. The cost impact is not trivial,' Musk admitted, noting the financial toll the tariffs have taken.

As a result, analysts have downgraded Tesla's financial outlook. Dan Ives of Wedbush Securities, once a vocal supporter of the stock, slashed his price target from £431.38 (USD 550) to £247.06 (USD 315) per share. Ives cited both the economic impact of tariffs and Musk's controversial public image as contributing factors, predicting a potential 10% loss in customer base due to the brand's 'crisis'.

Further complicating Tesla's outlook is its dependence on the Chinese market—its second-largest consumer base. The ongoing US-China trade dispute threatens to provoke consumer backlash and shift competitive advantages towards local electric vehicle brands like BYD, Nio and Xpeng.

What's Next for Tesla—and the Trade Debate?

While Elon Musk continues to advocate for free trade and minimal tariffs, his critics—including Navarro—view his position as self-serving. Yet for many industry observers, the debate underscores deeper questions about globalisation, industrial policy, and how modern companies function in an international economy.

Tesla's example is particularly instructive. Even as a trailblazer in innovation and clean energy, the company is deeply reliant on a vast web of international partners, suppliers, and factories. Attempting to isolate or localise production, as Navarro seemingly demands, would likely increase costs and reduce efficiency—two factors that could ultimately harm both the business and its consumers.

As the political rhetoric around tariffs intensifies ahead of the 2024 election, the battle between old-school protectionism and global manufacturing realities is set to grow louder. For Tesla, it remains to be seen whether the company can continue navigating these crosswinds—or whether the tariffs will spark deeper troubles for the world's most famous electric vehicle brand.