Elon Musk says he tried—and failed—to change President Donald Trump’s mind on tariffs, even as American manufacturers increasingly blame the levies for weakening their businesses.
In a conversation with investor and entrepreneur Nikhil Kamath released on Sunday, Musk said he urged Trump not to pursue sweeping import taxes, arguing that tariffs “create distortions in markets.” The Tesla chief executive has previously warned that such measures could tip the economy into recession and push up consumer prices. Earlier this year, Tesla halted new orders for some models in China after those vehicles were hit with a retaliatory 125% tariff.
“The president has made it clear he loves tariffs,” Musk said in the interview. “I’ve tried to dissuade him from this point of view, but unsuccessfully.”
He went on to compare tariffs to artificial barriers in everyday life.
“Would you want tariffs between you and everyone else at an individual level? That would make life very difficult,” he said. “Would you want tariffs between each city? No, that would be very annoying. Would you want tariffs between each state within the United States? No, that would be disastrous for the economy. So then, why do you want tariffs between countries?”
The White House did not immediately respond to a request for comment.
While Musk is worried about the impact on his own company, manufacturers across the U.S. are also tying the tariffs to a shrinking industrial sector and painful workforce reductions they say are necessary to survive. That’s the opposite of what Trump promised when he rolled out the duties, pitching them as a way to bring factory jobs back to American soil.
According to the Institute for Supply Management’s (ISM) Manufacturing PMI report released Monday, U.S. manufacturing contracted in November for the ninth straight month, with declines in new orders, supplier deliveries, and employment. Some survey respondents specifically pointed to tariffs as a factor slowing business and tightening labor conditions—and said they’ve boosted overseas production instead of expanding at home.
“We are starting to institute more permanent changes due to the tariff environment,” one transportation equipment industry respondent said in the report. “This includes reduction of staff, new guidance to shareholders, and development of additional offshore manufacturing that would have otherwise been for U.S. export.”
Tariffs and labor pressures
Recent data from the U.S. Bureau of Labor Statistics backs up those concerns. The latest jobs report showed that manufacturing shed 6,000 jobs in October, even as nonfarm payrolls overall increased by 119,000. Since Trump’s tariff push in April, manufacturers have cut a net 59,000 jobs, according to the figures.
Laura Ullrich, director of economic research at the Indeed Hiring Lab, told Fortune that one reason is how the tariffs are structured. Many of them fall on intermediate goods—components and materials used to make finished products—raising production costs for U.S. companies. To protect their margins, some firms respond by cutting staff. In a September note, Pantheon Macroeconomics analysts Samuel Tombs and Oliver Allen likewise linked slower wage growth to companies exposed to tariffs, arguing they’ve had to rein in pay to offset higher input costs.
Ullrich added that the broader uncertainty around trade policy also weighs on hiring, pushing companies to focus more on where they source materials and how they price products rather than on expanding headcount.
“It is striking how soft manufacturing has been because, in theory, you put tariffs in place to protect domestic manufacturing, so that domestic manufacturing employment grows,” she said. “And we have seen the opposite of that.”
Even as relations between Washington and Beijing show some signs of thawing, many manufacturers say the difficult calls around staffing are likely to continue as long as tariffs remain in place.
“Going into 2026, we expect to see big changes with cash flow and employee headcount,” one ISM survey respondent said. “The company has sold off a big part of the business that generated free cash while offering voluntary severance packages to anyone.”
