To The Moon

$Tesla Motors(TSLA)$ $Ford(F) $General Motors(GM)$

Alright, everyone, let’s dive into Tesla’s latest challenge and why it could be the biggest casualty of Trump’s trade war. Nations worldwide are striking back hard in response to Trump's tariff policies, and global supply chains will never be the same. Like it or not, countries will be forced to become more self-reliant. Economic blocs like BRICS will prioritize internal trade, self-sufficient economies such as China will shift toward domestic consumption, and for the rest, large-scale retaliation seems to be the only option.

One of the most significant counterattacks is now brewing in Canada, where officials are considering a major strike against a leading U.S. automaker—Tesla—whose sales are already in decline. Chrystia Freeland, currently running for election, has proposed a drastic measure: a 100% tariff on Tesla vehicles sold in Canada.

At first glance, her proposal makes strategic sense. Canada is the largest export market for the U.S., and while tariffs on alcohol and wine could hurt, Tesla—the golden child of the American economy—would take a much bigger hit. While Canada’s dependence on the U.S. market is well understood, many overlook the fact that the U.S. also heavily relies on Canada. Over 62% of Canada’s imports come from the U.S., giving Canada significant leverage in any trade dispute.

Trump has repeatedly argued that tariffs will bring jobs back to the U.S. and boost the economy. However, if Canada decides to retaliate against the U.S. auto industry, the consequences could be severe, leading not just to plummeting car sales but also widespread job losses and mass layoffs.

In a recent address to Congress, Trump reaffirmed his commitment to imposing tariffs on any country that does not manufacture goods within the U.S. His message was clear: no nation—China or otherwise—is exempt from this economic battle.

He stated: "For years, other countries have imposed tariffs on us, and now it’s our turn to do the same. The European Union, China, Brazil, India, Mexico, Canada—you name it—have been charging us significantly higher tariffs than we impose on them. That’s not fair. Starting April 2nd, reciprocal tariffs will take effect—whatever they tax us, we’ll tax them right back."

With tensions escalating, Canada’s proposed Tesla tariffs could mark a major turning point in the global trade war, further straining economic ties between the two allies.

US Auto Giant Collapsing Hard

Tesla

Be Patient—Any Nation with Self-Respect Will Push Back

Trump understands strength, and if a country fails to push back, it signals a lack of bargaining power. That’s why major powers like China have vowed to fight to the very end—in their own words. What’s fascinating now is that even Canada is stepping up its retaliation.

The province of Ontario has begun taking aim at U.S. contracts linked to Elon Musk’s companies. Starting today, all U.S.-based firms will be barred from participating in government procurement. Each year, Ontario and its agencies spend around $30 billion on procurement, alongside a $200 billion infrastructure investment plan. As part of this sweeping ban, Ontario is taking an even bolder step—canceling its contract with Starlink. It’s done. Gone. The province will no longer award contracts to companies that facilitate or encourage economic attacks on its economy and the country as a whole.

This marks a major shift from the usual “wait and see” or “hope for the best” approach. If Ontario is willing to scrap its Starlink contract, other U.S. companies could soon find their business dealings with Canada in jeopardy as well.

Meanwhile, Tesla is facing severe trouble worldwide. Its Q4 financial results have been released, and they are disastrous. The company’s stock has already plummeted by nearly 20% to 30%, and Trump's trade war could make things even worse. In Q4, Tesla reported $2.3 billion in net income on $25.7 billion in revenue, leaving it with a profit margin of under 10%. This resulted in a staggering 70% drop in income. If Tesla is struggling now, it certainly won’t be able to withstand a 25% tariff from Canada—let alone the 100% tariff proposed by Freeland if she becomes prime minister.

Elon Musk is about to face serious challenges from the north. Few U.S. automakers can compete globally, and despite Tesla’s high price tag, it has managed to survive. But there’s a limit—at some point, consumers simply won’t pay.

Canada is a critical market for Tesla. In 2023, Canadians purchased over 50,000 Tesla EVs, with much of the demand fueled by government subsidies. The Model Y was the best-selling vehicle in the entire Canadian market. Here’s the big problem—Tesla doesn’t have a manufacturing facility in Canada. Every single EV sold there is imported, primarily from the U.S. and China.

Musk now faces a tough decision: either abandon the Canadian market entirely or establish manufacturing facilities there. Ironically, if Tesla shifts production to Canada, it could weaken the U.S. auto industry—something Trump would never allow.

US Auto Industry Doomed Cause By Tariffs

Think Elon Can Just Shift Production to China? Think Again.

Sure, you might say Elon Musk could simply manufacture more cars in China and export them. But let’s take a quick history lesson. In 2024, the Biden administration cracked down on Chinese EV imports, and, as usual, Justin Trudeau followed suit—a move that, frankly, wasn’t the smartest. As it stands, Canada still enforces a 100% tariff on Chinese EVs.

In other words, any electric vehicle made in China and shipped to Canada is hit with a massive import tax. That alone is questionable policy, but for Tesla, it’s an even bigger problem. There’s no backdoor route to build cars in China and then send them to Ottawa. Whether Tesla manufactures its cars in the U.S. or China, it won’t matter—Trump’s trade war is about to blow up in his friend’s face.

Maybe Musk made one too many jokes about Canada, and now it's coming back to hit his bottom line. But let’s get serious about the bigger picture—America’s auto industry.

Ford

When it comes to global reach, Tesla is the only U.S. automaker with true international presence. Ford and GM barely register outside of the U.S. market. Thanks to Trump’s trade war, vehicles in the U.S. are about to get a lot more expensive. Some estimates suggest that car prices could rise by as much as $12,000 per vehicle. That kind of increase would push many cars out of reach for American consumers.

GM

With a 25% tariff on imports from Mexico and Canada, plus a 10% tax on Chinese auto parts, prices won’t just rise for foreign-made vehicles—it’ll also make it costlier to produce cars domestically. This is a self-inflicted wound by the Trump administration. Large SUVs could see price hikes of nearly $9,000, while pickup trucks may cost $8,000 more.

For many households, that increase is a dealbreaker, which could severely damage the U.S. auto industry—including Tesla. This is the reality of a trade war: slap tariffs on steel and aluminum, and you can expect manufacturing costs to skyrocket.

Tesla, in particular, is vulnerable. Each of its vehicles requires roughly 190 kg (over 400 lbs) of aluminum, not to mention the aluminum used in its batteries. If aluminum prices jump by 25%, Tesla’s production costs will surge as well. It’s basic cause and effect—something Trump’s policies are about to make painfully clear.

This Only Destroy US Economy

Trump’s Tariff Gamble and Its Unintended Consequences

When Trump imposed his tariffs, he likely didn’t anticipate the ripple effects. His focus was on squeezing revenue from American consumers, rather than considering the reality of U.S. supply chains.

So, where do U.S. automakers source their aluminum? The answer: Canada. Nearly 60% of all aluminum consumed in the U.S. comes from its northern neighbor. In 2024 alone, the U.S. imported 2.7 million tons of aluminum from Canada, supporting over 700,000 American jobs in the metals industry.

It’s important to note that Canada isn’t restricting aluminum exports—this isn’t a supply-chain weapon like China’s rare earth metals. Instead, the tariffs are self-inflicted, coming directly from the U.S. government. There’s no alternative supplier to replace Canada, meaning American importers—including Tesla—will be forced to absorb the costs.

The consequences for the U.S. auto industry will be severe. First, domestic sales will take a massive hit, potentially even collapsing. Second, any dream of exporting American-made cars globally will remain just that—a dream.

If Tesla loses the Canadian market while also facing skyrocketing production costs, how can it compete with Chinese EVs worldwide? The short answer: it can’t. Even manufacturing in China won’t save Tesla. Its monthly production output there has already hit a two-and-a-half-year low, with deliveries plummeting from 70,000 to just over 30,000—a more than 50% drop. This collapse in demand happened even before Trump’s trade war escalated, despite Tesla operating within China’s highly efficient manufacturing ecosystem. The competition from brands like BYD is simply too intense.

There are countless statistics to illustrate this point, but here’s a simple argument anyone can understand:

By imposing tariffs across the board, Trump is choking revenues in key markets, from Canada to China. When people lose jobs, they lose purchasing power. Even if Tesla slashes prices or shifts production, struggling consumers won’t be able to afford new cars.

And once people recover financially, do you think they’ll turn back to American-made vehicles? Unlikely.

This economic strain is already causing cracks in the Trump administration’s approach. Behind closed doors, the U.S. Commerce Secretary has been quietly urging Trump to ease tariffs under the USMCA compliance framework. Just hours later, Trump delayed tariffs on Canadian and Mexican auto imports. The CEOs of Ford, GM, and Stellantis reportedly lobbied him hard for a policy reversal—underscoring just how fragile U.S. auto supply chains truly are.

Faced with the risk of a full-blown industry implosion, the Trump administration had no choice but to take a major step back. But don’t expect them to reverse course completely just yet.

More Nasty Reality Check Coming

Even If Canada Gets an Exemption, Trouble Still Looms

Even if Canada secures an exemption from Trump’s tariffs, there’s still a nasty surprise waiting—reciprocal tariffs targeting VAT or national sales tax are still in play. Trump has made it clear that he will address all Canadian exports, arguing that Canada’s national sales tax functions as a hidden tariff on U.S. products.

His stance? Canada imports relatively little from the U.S. while exporting large amounts in return, and he intends to “reset” that imbalance. Starting April 2nd, those new trade policies will take effect. China already imposes massive tariffs on U.S. goods, and now Canada is in the crosshairs as well.

Trump’s argument boils down to this: why produce cars in Canada when it has long benefited from preferential access to the U.S. market? According to his administration, both Canada and Mexico were given an open invitation to trade with America’s powerful economy, but they have “abused” that opportunity—something he now plans to correct.

The Reality of Trade Wars

Trade wars are inherently destructive. They disrupt global supply chains, create chaos, and often end up harming the very economies they aim to protect. The idea of forcing trade to work “your way” goes against economic reality—this isn’t Burger King. If the world retaliates against U.S. imports, several fragile industries in America could face collapse.

No matter how dominant Tesla may seem, it still relies heavily on goodwill from global consumers. If tensions escalate, Canada could easily impose a retaliatory tax on Tesla imports, putting further pressure on Elon Musk’s already struggling company.

But what do you think? Will Canada go after Tesla, and will the U.S. eventually back down? Share your thoughts in the comments below!

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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