Tesla extended gains, up 7%.

President Donald Trump’s surprise tariff announcement on Wednesday evening is the reason car stocks face turmoil. Tesla stock, however, is getting a pass from investors thanks to its all-American manufacturing, even as CEO Elon Musk warns of higher costs.

The move came after Trump announced 25% import tariffs on all cars imported to the U.S. Key car parts are included, too. Trump’s prior plan contemplated import tariffs on Canada and Mexico. Those countries are still included, but European and Asian nations have been caught in Trump’s tariff net.

Tesla is in a relatively good position. It makes all the cars it sells in the U.S. in America. It does source parts from other countries, though, and those would be subject to tariffs, which Musk pointed out in a Wednesday tweet.

About 80% of the cars Ford Motor sells in the U.S. are made here. That’s second place to Tesla. Ford stock was down 0.3% in premarket trading. General Motors imports about 45% of the cars it sells here, mainly from Mexico and Canada.

Wall Street just didn’t expect this outcome from the president. “Auto tariffs [are] back on the table (for now),” wrote Wedbush analyst Dan Ives. He still believes adjustments might come. “These initial tariffs (if they hold in their current form) would be a hurricane-like headwind to foreign (and many U.S.) automakers and ultimately push the average price of cars up $5k to $10k depending on the make/model/price point.”

The new levies go into effect on April 2, which is the day Tesla is slated to release first-quarter deliveries. “It has been a tumultuous few months for Musk and Tesla as investors have navigated a very stormy backdrop with Tesla becoming a lightning rod of controversy with Musk spearheading the DOGE initiative for the Trump Administration,” wrote Ives in a separate report.

The culmination of the storm is likely to be weak first-quarter sales. Wall Street is expecting about 414,000 vehicles deliveries, according to FactSet, but the most current estimates are closer to 360,000 vehicles. Tesla delivered about 387,000 cars in the first quarter of 2024.

Ives expects a number between 355,000 and 360,000 vehicles, noting that some weakness is due to the Model Y changeover. Tesla recently started shipping an updated version of the Y. That has some people waiting for the new one while production ramps higher.

Investors are probably ready for a number below 400,000 units. Just how low they will accept remains to be seen.

Coming into Thursday, Tesla stock has fallen about 36% since the Jan. 20 presidential inauguration. Politics have been driving Tesla stock in more ways than one.