Tesla Halts Model S and Model X Orders in China Amid Escalating Trade Tariffs

Tesla has abruptly suspended new orders for its Model S and Model X electric vehicles in China, a move that underscores the intensifying trade tensions between the United States and China. According to Reuters, Tesla’s Chinese website no longer allows customers to configure or order these premium models, redirecting users to view limited existing inventory instead. This strategic pivot arrives as retaliatory tariffs—125% imposed by both nations—have drastically inflated the cost of U.S.-built vehicles in China, rendering Tesla’s flagship models less competitive against domestic rivals.

Trade War Drives Up Costs for U.S.-Built Teslas

The U.S.-China trade dispute has reached a fever pitch, with President Donald Trump’s administration recently escalating tariffs on Chinese goods to 145%, incorporating a fresh 125% hike atop a prior 20% levy. China swiftly countered, applying an identical 125% tariff on U.S. imports starting April 12, 2025, as reported by Bloomberg. For Tesla, this translates to a near-doubling of retail prices for the Model S and Model X, which are manufactured exclusively at its Fremont, California, facility.

In 2024, China imported just 1,553 Model X and 311 Model S vehicles, a fraction of Tesla’s total global deliveries of over 657,000 units, per data from the China Auto Dealers Association cited by Breitbart. These low volumes—less than 0.5% of Tesla’s annual sales—reflect the niche market for these high-end models in China, where locally produced Model 3 and Model Y dominate due to their affordability and exemption from import duties.

Tesla’s China Strategy: A Focus on Local Production

Tesla’s Shanghai Gigafactory, operational since 2020, produces the Model 3 sedan and Model Y SUV for both domestic sales and exports to markets like Europe. This facility has shielded Tesla from some tariff-related fallout, as these models bypass the import levies now crippling the Model S and Model X. The decision to halt new orders for the U.S.-built vehicles suggests a pragmatic shift, prioritizing cost-competitive, locally made offerings in a market where domestic giants like BYD are gaining ground.

BYD, for instance, sold 371,419 new energy vehicles in March 2025 alone, dwarfing Tesla’s premium segment sales, according to Business Standard. Tesla’s global deliveries of premium models, including the Model S, Model X, and Cybertruck, also fell 25% in the first quarter of 2025, a decline Reuters attributes partly to stagnant updates and backlash against CEO Elon Musk‘s political affiliations.

Market Implications: A Small but Symbolic Loss

The suspension of Model S and Model X orders in China represents a minor financial hit—estimated at roughly $170 million in lost revenue, per Electrek. These vehicles, while profitable, account for a sliver of Tesla’s Chinese sales, which are dominated by the lower-margin Model 3 and Model Y. However, the move carries symbolic weight, signaling the broader challenges foreign automakers face as trade barriers reshape global supply chains.

Analysts suggest Tesla’s exposure to China’s retaliatory tariffs is mitigated by its Shanghai operations. “Tesla is least affected by Trump’s tariffs among automakers due to its largely domestic manufacturing for sales in the U.S.,” notes Reuters, highlighting the company’s strategic footprint. Yet, the tariffs pose risks beyond vehicle sales. Tesla relies on Chinese battery cells for its Megapack and Powerwall energy products, and escalating duties could inflate costs or disrupt supply chains, per Electrek’s analysis.

Regulatory and Geopolitical Considerations

Tesla’s unique position in China—operating a wholly owned factory without a domestic partner—has historically fostered a cozy relationship with Beijing. However, the trade war introduces uncertainty. Some speculate that prolonged tensions could jeopardize Tesla’s Shanghai operations, a rare privilege for a foreign automaker. “If the trade war escalates, Tesla could even start worrying about the status of its factory in Shanghai,” warns Electrek, though no concrete moves by Chinese authorities suggest this yet.

Musk’s vocal criticism of tariffs, including his public feud with Trump adviser Peter Navarro, adds another layer of complexity. “Tesla has the most American-made cars. Navarro is dumber than a sack of bricks,” Musk posted on X. While Musk’s alignment with Trump’s administration has secured influence, his global business interests make Tesla vulnerable to retaliatory policies abroad.

Conclusion: Navigating a Turbulent Market

Tesla’s suspension of Model S and Model X orders in China, driven by 125% tariffs that have rendered these vehicles uncompetitive, reflects a broader struggle for automakers caught in the U.S.-China trade war. With just 1,864 units sold in China last year (1,553 Model X, 311 Model S), the financial impact is minimal, but the decision signals a strategic pivot toward local production and cost efficiency.

As Tesla leans on its Shanghai Gigafactory to sustain market share, questions linger about the long-term effects of trade barriers on EV innovation and affordability. For now, Tesla’s Model 3 and Model Y remain unscathed, but the industry watches closely to see how one of its leaders navigates this turbulent landscape.

EVXL’s Take: A Calculated Retreat with Long-Term Implications

For EVXL readers—electric vehicle owners and enthusiasts—this development highlights the fragility of global EV markets in the face of geopolitical strife. Tesla’s decision to pause Model S and Model X orders in China is a calculated retreat, preserving profitability in a market where these models were already niche. The move underscores the advantage of localized production, a lesson other automakers may heed as tariffs disrupt trade flows.

However, the broader implications warrant scrutiny. Tesla’s reliance on Chinese battery supply chains could become a liability if tensions persist, potentially driving up costs for U.S. consumers. Moreover, the tariff war risks stifling EV adoption globally by inflating prices and limiting competition. While Tesla’s Shanghai factory insulates it for now, the company must navigate a delicate balance—leveraging China’s manufacturing prowess while weathering U.S.-driven trade policies.

Skepticism is warranted regarding claims of a quick resolution. Both nations’ tit-for-tat tariffs suggest a prolonged standoff, and Tesla’s adaptability will be tested. For enthusiasts, this is a reminder that EVs aren’t just about range and performance—geopolitics and economics shape their future as much as technology does.

Photos courtesy of Tesla.