KUALA LUMPUR, March 17 (Bernama) -- Bursa Malaysia extended gains to a third consecutive session today, driven by broad-based buying across various sectors following the recent strong sell-off, in line with the performance of regional markets, an analyst said. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose by 15.66 points, or 1.04 per cent, to 1,527.81 from Friday’s close of 1,512.15. The benchmark index opened 5.43 points firmer at 1,517.58 -- its intraday low -- and peaked at 1,531.63 during the mid-morning session and maintained its momentum throughout the afternoon session. On the broader market, gainers thumped decliners 708 to 297, while 425 counters were unchanged, 994 untraded, and seven suspended. Turnover improved to 3.28 billion units worth RM2.40 billion from 3.24 billion units worth RM2.5 billion on Friday.
President Donald Trump's tariff policy has raised concerns across the auto industry, and Tesla is no exception.
Tesla's Concerns:
- Tesla sent an unsigned letter to the U.S. Trade Representative (USTR), warning about the potential negative impact of retaliatory tariffs on the electric vehicle (EV) maker.
- In the letter, Tesla noted that as a U.S. manufacturer and exporter, it encourages the USTR to consider the downstream impacts of actions taken to address unfair trade practices. Tesla emphasized that U.S. exporterscould face disproportionate impacts when countries respond to the U.S. trade actions.
Context of the Trade War:
- Canada has placed 25% tariffs on approximately $30 billion of U.S. goods, including steel and aluminum, in retaliation for Trump's tariffs. While cars aren’t included in this particular retaliation, there’s ongoing concern about future tariffs on the auto industry.
- The letter’s significance lies not only in Tesla's concern about the trade war's impact but also in the surprise that the letter came from Tesla, whose CEO, Elon Musk, has been a staunch Trump supporter and heads the newly formed Department of Government Efficiency, which aims to reduce federal costs and waste.
Impact on Tesla and Other U.S. Automakers:
- Other U.S. automakers, including Ford, have already expressed concerns about the potential impact of tariffs on profits, particularly with Canada and Mexico. Over the past three decades, the North American auto industry has become highly integrated, with cars and car parts crossing borders freely.
- While Tesla manufactures cars in the U.S. for domestic sales, it still sources parts from Canada and Mexico, making it vulnerable to retaliatory tariffs.
Global Trade and Tesla's Exports:
- Tesla is a U.S. exporter, sending cars to Canada, and despite the trade tensions, Tesla's global operations are important. In 2024, Tesla sold around 1.8 million cars worldwide, with approximately 635,000 of those sold in the U.S. Tesla also exports cars to Europe from its Shanghai plant, but these exports aren't part of the concern for the USTR.
Market Reaction:
- Tesla's stock dropped by 3% on Thursday, along with the broader market. The S&P 500 Index and the Dow Jones Industrial Average also fell by 1.4% and 1.3%, respectively.
- Tesla’s stock has been down over 50% from highs reached in mid-December as investors worry about the political influence surrounding Elon Musk, possibly turning off some buyers and investors.
Conclusion:
While the U.S. trade war and retaliatory tariffs are a concern for Tesla and other automakers, Tesla's involvement in the issue adds an unexpected twist, especially considering Musk's relationship with Trump. Tariffs could hit not only Tesla's exports but also its profitability if trade tensions continue to rise. Investors are now keeping a close eye on how this political and economic tension plays out for Tesla's future in both the domestic and global markets.
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