As U.S. President Donald Trump modifies its existing auto tariff policy, a new report from IDTechEX reveals Tesla, with a CEO that oversees the U.S. Department of Government Efficiency, is the big winner in this new easing of levies.
IDTechEX’s latest research highlights the implications Trump’s move may have for the electric vehicle sector in the U.S. They said sales data for the first quarter of the year shows strong growth for battery electric vehicles and overall car sales. BEV sales were up 19 per cent in Q1 compared to a year earlier, while PHEV sales were down 7 per cent.
“As sales data from April is analyzed, it will be seen whether the tariff policy resulted in a decline in vehicle sales,” said the company.
The earlier tariff imposed by Trump meant EVs in the U.S. faced a 25 per cent premium over traditional vehicles, at a time when the federal tax credit for electrified vehicles was also withdrawn. But Trump’s latest announcement about vehicle components makes adjustments to help ease the burden of auto tariffs so OEMs can shift production back to, or fully in, the U.S.
IDTechEX said a 15 per cent relief on content is now available to vehicles assembled in the U.S., though not imports. “[Companies] can claim back 3.75 per cent of the MSRP, so any vehicles with less than 15 per cent non-USMCA componentry are essentially tariff-free. From 1st May 2026, this drops to 2.5 per cent (10 per cent component threshold), and from 30th April 2027, this will be phased out.”
The company said Trump’s tariff update increases the minimum content threshold of non-USMCA content that a vehicle can contain before tariffs are imposed. Prior to his announcement, all content was subject to a 25 per cent tariff.
However, “the new rules mean a vehicle can contain up to 15 per cent non-USMCA before tariffs kick in. This derogation is phased, with the threshold dropping to 10 per cent in 2026 and phasing out completely in 2027. This only applies to vehicles assembled in the U.S., and components from China are excluded,” said IDTechEX.
As an example, a vehicle with 85 per cent USMCA components assembled in the U.S. will not be subject to Trump’s tariffs. But the same vehicle assembled in Canada would be subject to a 25 per cent tariff on non-USMCA components.
Tesla is emerging as the big winner in Trump’s latest announcement to ease auto tariffs. IDTechEX said all of its model lineup is “now effectively tariff-free,” since the vehicles contain at least 85 per cent USMCA content and they are all manufactured in the U.S.
“Based on previous tariff rates, MSRP, and previous years’ sales figures, IDTechEx estimates that this could avoid US$2.5 billion in tariff duties on Tesla products in the U.S.”
Tesla’s Model S and Model X are just on the line, with components within Trump’s updated tariff threshold sourced from the U.S./Canada and Mexico, and the rest sourced from elsewhere.
