In the ongoing trade tensions between the U.S. and its partners, Elon Musk’s companies—Tesla and SpaceX—have become prime targets. As the owner of the $1.2 trillion electric car company and the $350 billion space venture, Musk’s close ties with the White House have placed both businesses in a precarious position.
The trade war risk became more immediate after a series of proposed tariffs on Mexican and Canadian goods by the U.S. administration. While the initial 25% tariffs were temporarily paused, the situation escalated when Canadian politicians singled out Musk’s companies. Ontario Premier Doug Ford threatened to cancel a $68 million contract with SpaceX’s Starlink satellite service, while Canadian politician Chrystia Freeland suggested a 100% tariff on Tesla cars. Although these retaliatory measures were paused, they highlighted the leverage that other nations can exert on U.S. companies in such disputes.
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Musk’s companies are vulnerable to this geopolitical pressure. Tesla, with a market valuation 11 times its estimated 2025 revenue, faces potential harm from policy changes, especially since its sales in markets like China and Canada make up a significant portion of its business. The Canadian market, for example, represents about $7 billion in sales—15% of Tesla’s U.S. sales—which could lead to a $78 billion loss in market value if retaliatory tariffs hit. Similarly, SpaceX’s profitability depends on international clients, with Canada accounting for over 10% of its customers, which means that halting these sales could significantly hurt the company’s margins.
Investors may have underestimated the negative impact of political tensions on Musk’s businesses. While Tesla’s market capitalization surged following the 2024 U.S. presidential election, the exposure to external factors, such as tariffs or trade wars, could lead to losses. Musk’s role as a political ally to the U.S. government may offer some short-term advantages, but the long-term impact of trade conflicts could be damaging.
In conclusion, while Musk’s companies are seen as valuable assets by investors, their dependence on international markets makes them vulnerable to the unpredictable forces of global trade disputes. The current U.S.-China trade tensions have highlighted how easily trade relations can turn into liabilities for even the most influential business leaders.
