Tesla Inc (NASDAQ:TSLA) has suspended plans to import components from China for its Cybercab and Semi electric truck in the U.S. after President Donald Trump ramped up tariffs on Beijing, Reuters reported on Wednesday.
The move stands to potentially disrupt Tesla’s ambitions to build autonomous vehicles and trucks, which CEO Elon Musk has repeatedly touted as the next leg of growth for the struggling electric vehicle maker.
Tesla was able to absorb additional costs when Trump imposed 34% tariffs on Chinese goods, but could not stomach any higher tariffs, leaving shipping plans suspended, the Reuters report said, citing a person with knowledge of the matter.
Trump hiked tariffs on China to a cumulative 145% earlier in April, marking the start of a bitter, renewed trade war between the world’s biggest economies.
Components imported by Tesla are also subject to Trump’s additional 25% levy on imported automobiles and automobile parts.
Musk had last month flagged a “substantial” impact on Tesla from the tariffs. While the company does manufacture all of its U.S.-sold vehicles domestically, it imports several key components from across the globe, with China playing a major role in the supply chain.
The U.S.-China tariff exchange potentially heralds more headwinds for Tesla, which is already grappling with steadily declining sales amid an aging line-up, heavy competition from Chinese producers and a shift in consumer preferences towards hybrids over pure EVs.
Tesla is also facing a consumer boycott, especially in Europe, over CEO Musk’s political affiliations.
Tesla did not immediately respond to a mailed request for a comment.
