In a striking development that underscores the escalating tensions between the United States and China, Tesla, the electric vehicle manufacturer helmed by Elon Musk, has suspended new orders for certain models in China. The decision follows President Donald Trump’s dramatic move to impose 145% tariffs on Chinese goods—a policy that was quickly met with an 84% retaliatory tariff on American imports by Beijing.

The fallout has been immediate for Tesla. The company has reportedly halted new purchases of its Model S and Model X vehicles—both manufactured in the U.S.—through its WeChat account, effectively pausing a significant segment of its business in the world’s largest EV market. These premium vehicles, unlike the more affordably priced Model 3 and Model Y, which are built at Tesla’s Shanghai factory, are now subject to steep import duties that could deter potential buyers.

China: Tesla’s most important foreign market

The decision to freeze orders is more than just a short-term reaction—it points to growing vulnerabilities in Musk’s sprawling electric vehicle empire. China has long been Tesla’s most critical international market, second only to the U.S. in terms of sales.

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Musk has consistently cultivated strong ties with Chinese officials and suppliers, especially given the country’s dominance in the lithium-ion battery supply chain—a cornerstone of EV technology.

Despite political headwinds, Tesla’s China business had been booming. The company sold 657,000 vehicles in the country in 2024, marking an 8.8% year-on-year increase. In March alone, Tesla delivered over 74,000 units—an impressive 19% annual growth.

But Tesla’s dominance is being challenged. Domestic Chinese automaker BYD has not only captured a commanding 29.3% market share—compared to Tesla’s 7.5%—but also surpassed Tesla in global revenue last year. The competitive landscape, combined with the added burden of tariffs, is forcing Tesla to recalibrate.

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Boycotts, backlash, and political entanglements

Tesla’s troubles aren’t limited to trade policies. The automaker is reportedly facing consumer boycotts, and several of its vehicles have been vandalized across the U.S. and Europe. The backlash appears to stem from Musk’s increasingly visible association with Trump, particularly in his role as head of the newly established Department of Government Efficiency, or DOGE.

“This is a clear indication that Musk’s businesses are suffering,” said an anonymous industry insider, referencing the recent downturn in Tesla’s stock and the growing unease among international buyers.

Tensions rise within the Trump-Musk dynamic

Despite his proximity to the Trump administration, Musk hasn’t held back in voicing his frustrations over the economic impact of the trade war. Privately, the Tesla CEO has expressed concern that escalating tariffs could provoke other countries to impose punitive duties on his vehicles, effectively shrinking Tesla’s global footprint.

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The strain became public when Musk launched a scathing verbal attack on Peter Navarro, Trump’s trade advisor and architect of the reciprocal tariff strategy. Musk described Navarro as “dumber than a sack of bricks” and “truly a moron.” Navarro, in turn, dismissed Musk as a mere “car assembler.”

“Free trade zone”: Elon Musk wants ‘zero tariff situation’ between US and EU after Tesla loses BILLIONS amid Trump’s tariff war

Musk has called for a “zero tariff situation” between the U.S., European Union, and China, urging for the establishment of a global free trade zone. His remarks suggest mounting anxiety over the long-term viability of Tesla’s international strategy if political and economic instability continues.

Tesla’s once unstoppable momentum appears to be slowing

As Musk battles on multiple fronts—trade wars, political controversies, and growing competition from domestic and international rivals—Tesla’s once unstoppable momentum appears to be slowing. The company’s stock has plummeted nearly 50% from its all-time high in December, and questions are mounting about whether the automaker can maintain its edge in the face of mounting geopolitical turmoil.

One thing is clear: Tesla’s decision to halt new orders in China is more than a business move—it’s a red flag for the global electric vehicle market and a reflection of the new world order reshaped by tariffs, nationalism, and economic power plays.