How Trump’s tariffs will affect Elon Musk’s empire

Elon Musk had nothing to say last week after President Trump plunged global financial markets into chaos and his announcement of “mutual tariffs” sparked a new horror of a global recession.

Musk has since found his voice, revealing his opposition to Trump’s signature economic policy. On Saturday, Musk says he wants to see the US and Europe move towards the Zero Customs Agreement. On Sunday, he blasted Trump’s trade adviser Peter Navarro for praise of tariffs. On Monday he shared a video where economist Milton Friedman praised the benefits of free trade. He even made a personal appeal to Trump over the weekend, according to the Washington Post. For a good measure, his brother Kimbal Musk, a shareholder of Tesla, called Trump and “the highest tax American president of a generation.”

It’s no wonder why masks are unhappy. Tariffs are bad for business and really bad for the business of the wealthiest man in the world. Tesla shares have fallen 17% since Trump’s mutual tariff announcement. Private SpaceX faces rising costs across its supply chain and unfortunate international clients.

Musk’s artificial intelligence startup Xai, Tunnel Builder Boring Co, and brain implant company Neuralink, also face rising costs and disruptions in the supply chain. In the case of his social media company X, if the fear of a recession comes true, advertising spending could drop on impending fines by EU regulators for violating illegal content and disinformation laws of over $1 billion.

Here’s how mask’s three biggest companies hit Trump’s tariffs:

Tesla (Mask interest: $130 billion)

For a long time, Tesla, the biggest source of Musk’s fortune, handed over the spot to SpaceX last month. Musk’s stock value has gone more than half from its $266 billion peak in December. Tesla’s global sales have retreated not only due to backlash against masks’ role in the Trump administration, but also due to increased competition in China, Tesla’s biggest market from domestic EV manufacturers like BYD.

Trump’s tariffs are trying to make Tesla’s reality even more painful.

Like most large manufacturers, Tesla relies on the global supply chain of raw materials that enter the vehicle. Government data since the end of last year shows that Tesla imports 20-25% of car parts from foreign suppliers constructed and sold in the US (except Canada), with 40% of that imports, with a recent analysis from Japan containing materials that include materials from Chinese suppliers. “This is a huge failure in the vast proportions of the entire automotive industry, including Tesla,” Dan Ives, global head of technology research at Wedbush Securities, told Forbes via email. “Economic Armageddon.”

Scott Kennedy, a Chinese expert at the Center for Strategy & International Studies, said it would escalate the escalation of tensions between the US and China, and that Musk would not be able to influence the administration’s policies. Facilities. Musk and its relationship with Trump administration and its policies further undermines the brand’s appeal to Chinese buyers who have already abandoned Tesla for low-cost domestic competitors such as XPENG and BYD, which veiled Tesla as the biggest EV maker last year. “Whether it’s a Chinese official or a consumer, the outlook for Tesla in China is pretty bleak,” Kennedy says.

Musk is fully aware of the challenge. “It’s important to note that Tesla is not unharmed here,” he tweeted two weeks ago, referring to Trump’s automatic rates before Trump announced his even higher mutual tariff regime. “The impact of tariffs on Tesla remains important.”

Despite these costs, Tesla is better than many of its US rivals in dealing with tariffs, unlike other vehicles that import at least some vehicles from Mexico and elsewhere, producing all Tesla vehicles that sell Austin and California Gigafactories to American consumers. “From a US sales perspective, we don’t hurt them in terms of cost as much as legacy automakers,” said Tu Le, head of Consultancy Sino Auto Insights. “It’s not great for Tesla, but I think it’s a bad thing for many other car manufacturers in the US.”

But even if Tesla is better than his rivals in terms of price, there is a need to deal with the deterioration in brand equity, which is likely to accelerate if Trump’s tariffs cause a recession, says Tinlongdye, a supply chain professor at Johns Hopkins University who studied Tesla. “I think the business is even worse because of not only rising costs, but the backlash is deepening now. People didn’t like him.

SpaceX (Musk interest value: $147 billion)

The rocket makers and operators of satellite internet company Starlink are now the largest source of Elon Musk’s property. An estimated 42% stake in his business was worth $147 billion earlier this year when SpaceX traded its stock at a $350 billion valuation in the secondary market. Since 2009, it has received $3.6 billion in US government contracts and was awarded a $5.3 billion rocket launch contract by 2029. However, SpaceX relies not only on the goodwill of its international partners in the Starlink business, which accounted for SpaceX’s $13.1 billion revenue last year, but also on foreign suppliers for the raw materials and parts that enter its products, according to payload space estimates.

“Tax introduces challenges to many aspects of SpaceX’s operations, including supply chain costs, international contracts and the regulatory environment,” said Maxime Puteaux, principal advisor at Space Consultancy Novaspace. “Space companies are already under great pressure from rising interest rates, sustained inflation and post-Cobbynamic market trends. Tariffs will only exacerbate the blow and strengthen the pressure.”

SpaceX’s Starlink relies heavily on Asian manufacturers. Taiwanese company Wistron Neweb Corporation began production of Starlink routers and other network gear at its Vietnamese factory last year, but other suppliers, including Taiwanese manufacturers universal microwave technology, Shenmao Technology and Chin-Poon Industrial, have begun moving some of their operations in Vietnam and Thailand, according to Reuters. (Vietnam and Thailand are one of the most intense countries with Trump’s tariffs, each facing 46% and 36% taxes, respectively.) Tariffs in particular in Vietnam could hamper SpaceX’s planned business.

Next are the raw materials and rare earth metals that many other US manufacturers that SpaceX relies on.

“SpaceX has done a pretty good job of internalizing much of its development and manufacturing, but there are still many suppliers exposed to countries exposed to tariff-affected countries,” said James Gellert, executive chairman of supply chain analytics firm Rapidratings. “There are certain components or elements working on building high-tech products like SpaceX that don’t have many alternative providers, and so if costs rise exponentially, the concentration risk is exacerbated.”

One of these elements is Samarium, a silver metal, a key component of magnets used in SpaceX’s rocket propulsion systems and other US aerospace and defense companies’ magnets, says Johns Hopkins’ Tinlong Dye. According to the Montana Mines and Geology Bureau, the United States “imports much of (samarium) from China.” On Friday, Chinese officials announced that the country would require a license for exporting samarium and six other rare earth elements. Mineral exporters must apply for an export license through the Chinese Ministry of Commerce. “Buyers cannot necessarily diversify from suppliers or locations,” Gellert says. “And this is one of the problems with customs thinking today. The idea that the purchaser, the purchaser, can move the supply chain domestically is naive.”

In addition to supply chain issues, SpaceX needs to worry about how foreign governments view Trump. Plus, masks: Starlink Satellite Internet Business is available in over 125 countries, but these countries don’t have to continue business with SpaceX. In Canada, Ontario Prime Minister Doug Ford said last month that he would raise a $68 million contract with Starlink in response to Trump’s trade war. “It highlights the vulnerability of SpaceX’s international agreement amid growing trade tensions,” says Maxime Puteaux of Novaspace. “Political affiliation could have an international impact on regulatory approval and partnerships.

Xai (Musk’s Utake value: $42 billion)

Elon Musk’s artificial intelligence company recently merged with social media site X in a $113 billion merger that valued the AI ​​business at $80 billion. Founded in 2023, Xai has raised over $12 billion from investors who helped create a massive supercomputer cluster in Memphis with over 100,000 Nvidia GPUs. For phase two of its growth, Xai plans to build its second largest data center in Memphis on a 100-acre site that it purchased for $80 million last month. With Trump’s tariffs in place, it’s more expensive than ever.

According to an analysis by Jason Miller, professor of supply chain management at Michigan State University, US data centers rely on parts from China, Taiwan and Vietnam, particularly from China, Taiwan and Vietnam, and in particular from China, Taiwan and Vietnam. “For a long time, these tariffs, especially this spiral of escalation with China, will significantly increase the price of equipping data centers for operation,” he says.

Companies like Xai have to fight against rising costs of goods such as steel and aluminum that enter the construction of warehouses that protect all servers. MattMittelsteadt is a Technology Policy Fellow at the Cato Institute, and in his recent story, he wrote about Global Ai Regard as us as the in the in the in the hat as hat as figs fis a sec as figs fis on sec as a sect as figs on cose cost in courts cost in cost for sport for sporll