The tariffs cover parts as well as whole vehicles. The thing announced here is that they'll have a rebate program if the car is 85% manufactured in the US, and the rebate will be in effect for 2 years. So you still pay the tariff on parts, but you get some or all the money back if you meet that threshold. The idea being that it gives the company two years to move their parts manufacturing or sources. But the threshold is so high that only Tesla gets to enjoy the rebate, not any other company.
But even Tesla only maxes out at 75 - how are they eligible? Also wouldn’t surprise me if this carve out is special purpose to give Tesla and only Tesla this rebate.
> Right but presumably 85% of the parts aren't imported?
85% of parts != 85% of cost
The rules for calculating what percentage of a vehicle is domestic or foreign made are obscure. It's not clear what rules they're going to be using for this tariff exemption yet.
It could be possible that the 15% foreign content of a car could make up 30% of the cost of goods sold, for example. If the parts come from China they could have a 125% or higher tariff applied, pushing the share of BOM cost even higher.
The article is really bad. Even the original source is just an off-hand comment from Lutnick, not the final regulation.
The idea is that automakers will get special exemptions from the tariffs for what they do import.
Handing out tariff exemptions was one of the red flags people were raising during this process. It becomes a lever the administration can pull to grant favor to specific companies. Everyone else suffers.
