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Musk wins breathing room as U.S., China pause tariff fight

... Tesla set to reboot U.S. production with Chinese parts after trade ceasefire

David Ijaseun by David Ijaseun
May 16, 2025
in Business, Electric Vehicles
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Elon Musk

Elon Musk

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Tesla is set to resume shipments of key vehicle components from China to the United States later this month, following a breakthrough in trade talks between Washington and Beijing, a source with direct knowledge told Reuters.

The move allows Tesla to restart trial production of its much-anticipated Cybercab and Semi truck models by October, with full-scale manufacturing scheduled for 2026. The Cybercab will be built in Texas, and the Semi at Tesla’s Nevada plant.

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This development follows a weekend agreement in Geneva where U.S. and Chinese trade representatives agreed to roll back significant tariffs and countermeasures. The truce effectively suspended a 145% tariff hike announced last month by U.S. President Donald Trump, which had forced Tesla to freeze parts shipments and delay production.

The resumed flow of Chinese-made components marks one of the first tangible business shifts since the de-escalation of trade tensions between the world’s two largest economies.

“The situation remains fluid,” the source said, warning that future policy shifts could still derail plans. The individual requested anonymity as they were not authorized to speak publicly.

Tesla has not yet issued an official comment.

Impact on Tesla’s rollout plans

Tesla unveiled the Cybercab, a steering wheel- and pedal-free robotaxi, last October. The company intends to offer it for less than $30,000, targeting mass affordability in the emerging autonomous vehicle market.

The automaker is currently seeking regulatory approval for its robotaxi fleet across multiple U.S. states. If successful, Tesla could launch the service using fully autonomous Cybercabs by 2026.

In parallel, Tesla plans to scale production of its all-electric Semi truck, which has seen long-standing delays. Major clients, including PepsiCo, are awaiting fulfillment of large fleet orders initially promised years ago.

Tariffs hurt Tesla’s expansion

President Trump’s earlier tariff hike on Chinese imports was designed to encourage domestic manufacturing. However, it inadvertently impacted Tesla, whose CEO, Elon Musk, has been a vocal advocate of free trade.

Musk confirmed during Tesla’s Q1 earnings call that he had asked Trump to reconsider the tariff policy. “I made my case, but the decision ultimately lies with the President,” Musk said.

Tesla’s Chief Financial Officer, Vaibhav Taneja, added that the tariffs were also holding back capital investment. The company has had to import critical manufacturing equipment, much of it from China, to build out its U.S. production lines. “Tariffs don’t just hurt imports. They slow down the expansion of clean energy manufacturing in the U.S.,”** Taneja said on the same call.

What this means for the auto industry

Tesla’s ability to move forward with production and delivery timelines could energize investor confidence and boost electric vehicle adoption in the U.S. Moreover, the trade breakthrough may offer breathing room to other automakers similarly dependent on Chinese supply chains.

Still, the political landscape remains unpredictable, and automakers are bracing for potential policy reversals as the 2024 election results settle in.

Read more on Global EV sales set to surpass 20 million in 2025, driven by China and Europe

Tags: ChinaHeadlineTariffsTeslaU.S.

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