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Yahoo
an hour ago
- Automotive
- Yahoo
Trump Won't Take Away Tesla's Subsidies. Does That Make TSLA Stock a Safe Buy Here?
After weeks of escalating tension between two of America's most high-profile figures — Elon Musk and President Donald Trump — a surprising shift in tone has emerged. In a recent post, Trump denied claims that he intends to 'destroy' Musk's companies, including Tesla (TSLA) and SpaceX, insisting instead that he wants Musk to 'THRIVE like never before.' The statement appeared to be an olive branch, but does it really change the equation for Tesla? In this article, we'll unpack the implications of Trump's recent statements and explore whether TSLA stock is truly a safe buy today, or if investors should brace for further turbulence ahead. More News from Barchart Morgan Stanley Says Nvidia Has 'Exceptional' Strength. Should You Buy NVDA Stock Here? Dear MicroStrategy Stock Fans, Mark Your Calendars for July 31 2 Growth Stocks Wall Street Predicts Will Soar 74% to 159% Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. With that, let's dive in! About Tesla Stock Tesla (TSLA) is a prominent innovator dedicated to accelerating the global transition to sustainable energy. The Elon Musk-led powerhouse designs, develops, manufactures, leases, and sells high-performance fully electric vehicles, solar energy generation systems, and energy storage products. It also offers maintenance, installation, operation, charging, insurance, financial, and various other services related to its products. In addition, the company is increasingly focusing on products and services centered around AI, robotics, and automation. TSLA has a market cap of $1.02 trillion. Shares of the EV maker have fallen 21.7% on a year-to-date basis. Tesla faced renewed selling pressure following its Q2 earnings report, after CEO Elon Musk warned of tough times ahead for the company as incentives like the EV tax credit phase out in the U.S. Still, the recent U.S.-EU trade agreement and Tesla's $16.5 billion deal with Samsung to manufacture next-generation chips provided some relief, helping to protect the stock from further losses. Trump Says He Won't 'Destroy' Musk's Companies — But Does It Matter Anymore? Last Thursday, President Donald Trump dismissed allegations that he intends to undermine Elon Musk's companies or their work with the U.S. government. 'Everyone is stating that I will destroy Elon's companies by taking away some, if not all, of the large-scale subsidies he receives from the U.S. Government. This is not so!' Trump said in a post to Truth Social. The president, who has repeatedly threatened to revoke Musk's government contracts and subsidies since their public feud last month, emphasized that he wants Musk to 'THRIVE like never before.' The post seemed to be an attempt to ease tensions in the feud. In June, Trump threatened to cut some of Musk's government contracts as tensions escalated between the two over the president's 'One Big Beautiful Bill' and their relationship unraveled. Still, in a post on X, Musk insisted that his companies do not receive any special subsidies or preferential contracts from the federal government, effectively rejecting what appeared to be a peace offering from Trump. 'The 'subsidies' he's talking about simply do not exist,' Musk wrote. Musk then alleged that Trump, whom he referred to only as 'DJT,' had 'already removed or put an expiry date on all sustainable energy support while leaving massive oil & gas subsidies untouched,' taking a swipe at the president's sweeping spending bill that eliminated the $7,500 federal EV tax credit. Besides phasing out tax credits for EV purchases, the law also dismantled federal fuel-economy standards that have been a significant source of revenue for Tesla over the years. According to FedScout, Tesla has generated $12.24 billion in revenue from the sale of 'automotive regulatory credits,' also known as environmental credits, since 2015. During the Q2 earnings call, Musk cautioned that Tesla could face 'a few rough quarters' as a result of tariff-related costs and the expiration of federal EV incentives at the end of September. In its most recent 10-Q filing, Tesla referenced Trump's 'One Big Beautiful Bill Act' using its initials, OBBBA, in the Risk Factors section. 'The loss of previously available tax credits and carbon offset mechanisms may further negatively impact our financial results,' according to the filing. In addition, the company said that 'provisions of the OBBBA could affect battery cell expenses and impact costs for our consumers, negatively impacting demand.' Musk also dismissed claims that his rocket company, SpaceX, was receiving preferential treatment, stating that 'SpaceX won the NASA contracts by doing a better job for less money.' Musk argued that moving SpaceX's contracts to 'other aerospace companies would leave astronauts stranded and taxpayers on the hook for twice as much!' Meanwhile, a recent report from the Wall Street Journal appeared to confirm Musk's claims regarding SpaceX. The report stated that the Trump administration had recently reviewed SpaceX's federal contracts to assess potential areas for cuts. However, the review found that most of the contracts were critical. Notably, SpaceX has received more than $22 billion through federal government contracts since 2008, according to FedScout. To sum up, Trump's recent remarks don't make TSLA stock a safe buy, as his tax bill has already dealt a blow to the company — regardless of what he now says. With that, let's shift our focus to the company's recent earnings report for a closer look. Tesla's Struggles Persist With More Challenges on the Horizon On July 24, TSLA stock dropped more than 8% after the company reported its steepest revenue decline in at least a decade, with CEO Elon Musk cautioning about challenging times ahead. Musk said that Tesla is entering a transition period that could last a year or longer, as it loses U.S. electric vehicle incentives and requires time to roll out its autonomous vehicles. 'We probably could have a few rough quarters,' he noted. Musk's remarks were his most direct yet regarding the impact of the tax bill signed by President Donald Trump this month on Tesla. I covered TSLA's Q2 results in depth in my previous article, so here I'll briefly highlight the headline numbers and focus more on the fallout from the tax bill. Tesla's total revenue stood at $22.5 billion, down 11.8% year-over-year and the sharpest decline since 2012. Its adjusted EPS slumped 23% year-over-year to $0.40, but was in line with expectations. The company's core automotive business continued to struggle amid intensifying competition and backlash from Musk's political activities. Revenue from the automotive segment declined 16% year-over-year to $16.7 billion due to lower vehicle deliveries, falling average selling prices, and lower revenue from regulatory credit sales. And this is where it gets most interesting. Revenue from regulatory compliance credits that Tesla sells to rival automakers fell to $439 million in Q2, down 26% from the first quarter and 51% year-over-year. This revenue stream is now at risk following the tax law signed by Trump this month, which removed penalties automakers previously faced for not meeting federal fuel-economy standards. Most importantly, revenue from regulatory credit sales flows directly to Tesla's bottom line. Trump's tax bill is poised to eliminate penalties for automakers that fail to meet the National Highway Traffic Safety Administration's Corporate Average Fuel Economy (CAFE) standards, which are a key driver of demand for these regulatory credits. The future of two other credit sources — those from the U.S. Environmental Protection Agency and California's zero-emission vehicle program — remains uncertain due to proposed rule changes and political and legal challenges. Earlier this month, William Blair analysts estimated that roughly 75% of Tesla's credit revenue is derived from CAFE standards. Just days after the new law was enacted, they cut their estimate for the company's 2025 credit revenue by nearly 40%, bringing it down to around $1.5 billion. The analysts project it will drop to $595 million next year and be completely wiped out in 2027. 'The elimination of the CAFE fines requires a reset in expectations,' the William Blair analysts said in a note. What Do Analysts Expect for TSLA Stock? Wall Street analysts remain divided on Tesla, as the stock currently holds a consensus rating of 'Hold.' Of the 41 analysts covering the stock, 12 rate it a 'Strong Buy,' two label it a 'Moderate Buy,' 17 suggest holding, and 10 have assigned a 'Strong Sell' rating. Notably, the stock currently trades at a premium to its average price target of $299.28. The company's valuation reflects a similar trend, with a forward non-GAAP price-earnings ratio of 190.14x, well above both the sector median and its own 5-year average. The premium stems from investors' confidence in Musk's promises surrounding artificial intelligence, robotics, and self-driving technology. Meanwhile, analysts tracking the company anticipate a 30.38% year-over-year decline in its adjusted EPS to $1.68 for fiscal 2025, with revenue expected to drop 5.19% year-over-year to $92.62 billion. The Bottom Line on TSLA Stock Putting it all together, as I noted earlier, TSLA doesn't appear to be a safe buy in light of Trump's recent remarks. Actions speak louder than words — and Trump's tax legislation has already significantly damaged Tesla's financial outlook. On top of that, the company's valuation looks expensive even for a high-growth company, but Tesla doesn't look like a growth story anymore, with both its revenue and earnings projected to decline this year. On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
2 hours ago
- Business
- Forbes
President Trump Is Downsizing The Internal Revenue Service
The Internal Revenue Service (IRS), part of the Department of the Treasury, is the federal agency responsible for administering and enforcing federal tax laws. It is currently facing significant challenges due to budget cuts implemented by President Trump. IRS Staffing Cuts Highlighted in Inspector General Report The Treasury Inspector General for Tax Administration (TIGTA) publishes reports that provide insight into the operations of the IRS. On July 18, 2025, TIGTA released report number 2025-IE-R027. The report reveals that the IRS employed 103,000 people at the beginning of 2025. By May, 26,000 of those employees had left or will soon leave, reducing the agency's workforce to 77,000—an attrition that will take place over just seven months (IRS data table). One Big Beautiful Bill Introduces Sweeping Tax Changes Congress passed—and President Trump signed into law—One Big Beautiful Bill (OBBB), officially titled An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14 (full bill text). OBBB is a comprehensive tax overhaul passed solely with Republican votes through the Senate reconciliation process. It includes numerous complex tax and non-tax provisions, which will: The Legacy of the Inflation Reduction Act On Aug. 16, 2022, President Biden and Congress passed the Inflation Reduction Act (IRA), which increased IRS funding by $80 billion over 10 years. Later acts of Congress reduced this amount to $38 billion. TIGTA tracked the IRS's use of these funds. As of Sept. 30, 2024, the IRS had spent only $9 billion. Of that amount, $2 billion went toward regular annual operating expenses due to shortfalls in its base budget (TIGTA March 2025 report). The intent of this funding was to modernize the IRS and to increase enforcement on higher income taxpayers. Treasury Requests Less IRS Funding in 2026 On May 30, 2025, the Department of the Treasury submitted its budget request for fiscal year 2026, calling for a 20% funding reduction compared to the prior year. Excluding IRA-related funds, the Treasury is requesting $12 billion for 2026, down from $13.2 billion in 2025. Additionally, the department has asked Congress to rescind another $17 billion of the IRA funding, leaving just $21 billion available—more than half of which has already been spent (Treasury FY 2026 budget request). Congress Proposes Even Deeper Cuts House Republicans on the Appropriations Committee have introduced a proposal to cut another $2.8 billion from the IRS budget for 2026—above and beyond the Treasury's request. If enacted, this would reduce the IRS budget to levels not seen since 2002 (Bloomberg report). The tax code the IRS is required to enforce is much larger and more complicated than it was in 2002. Mounting Challenges for the IRS The IRS faces several challenges heading into the next filing season: The new IRS commissioner recently stated that the 2026 tax filing season will likely begin around Feb. 16. This indicates the IRS realizes next filing season will be difficult. What Taxpayers Can Do Now The upcoming tax season will likely be difficult for the IRS, taxpayers, and tax professionals alike. Here are steps individuals and families can take to prepare: Looking Ahead President Trump and he Trump administration are implementing major changes to the IRS. The real impact of these shifts will become clearer in the year to come. Many tax professionals expect the next filing season to be quite challenging.
11 hours ago
- Business
Triumphant in trade talks, Trump and his tariffs still face a challenge in federal court
WASHINGTON -- President Donald Trump has been getting his way on trade, strong-arming the European Union, Japan and other partners to accept once unthinkably high taxes on their exports to the United States. But his radical overhaul of American trade policy, in which he's bypassed Congress to slam big tariffs on most of the world's economies, has not gone unchallenged. He's facing at least seven lawsuits charging that he's overstepped his authority. The plaintiffs want his biggest, boldest tariffs thrown out. And they won Round One. In May, a three-judge panel of the U.S. Court of International Trade, a specialized federal court in New York, ruled that Trump exceeded his powers when he declared a national emergency to plaster taxes — tariffs — on imports from almost every country in the world. In reaching its decision, the court combined two challenges — one by five businesses and one by 12 U.S. states — into a single case. Now it goes on to Round Two. On Thursday, the 11 judges on the U.S. Court of Appeals for the Federal Circuit in Washington, which typically specializes in patent law, are scheduled to hear oral arguments from the Trump administration and from the states and businesses that want his sweeping import taxes struck down. That court earlier allowed the federal government to continue collecting Trump's tariffs as the case works its way through the judicial system. The issues are so weighty — involving the president's power to bypass Congress and impose taxes with huge economic consequences in the United States and abroad — that the case is widely expected to reach the U.S. Supreme Court, regardless of what the appeals court decides. Trump is an unabashed fan of tariffs. He sees the import taxes as an all-purpose economic tool that can bring manufacturing back to the United States, protect American industries, raise revenue to pay for the massive tax cuts in his 'One Big Beautiful Bill,'' pressure countries into bending to his will, even end wars. The U.S. Constitution gives the power to impose taxes — including tariffs — to Congress. But lawmakers have gradually relinquished power over trade policy to the White House. And Trump has made the most of the power vacuum, raising the average U.S. tariff to more than 18%, highest since 1934, according to the Budget Lab at Yale University. At issue in the pending court case is Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs without seeking congressional approval or conducting investigations first. Instead, he asserted the authority to declare a national emergency that justified his import taxes. In February, he cited the illegal flow of drugs and immigrants across the U.S. border to slap tariffs on Canada, China and Mexico. Then on April 2 — 'Liberation Day,'' Trump called it — he invoked IEEPA to announce 'reciprocal'' tariffs of up to 50% on countries with which the United States ran trade deficits and a 10% 'baseline'' tariff on almost everybody else. The emergency he cited was America's long-running trade deficit. Trump later suspended the reciprocal tariffs, but they remain a threat: They could be imposed again Friday on countries that do not pre-empt them by reaching trade agreements with the United States or that receive letters from Trump setting their tariff rates himself. The plaintiffs argue that the emergency power laws does not authorize the use of tariffs. They also note that the trade deficit hardly meets the definition of an 'unusual and extraordinary'' threat that would justify declaring an emergency under the law. The United States, after all, has run trade deficits — in which it buys more from foreign countries than it sells them — for 49 straight years and in good times and bad. The Trump administration argues that courts approved President Richard Nixon's emergency use of tariffs in a 1971 economic crisis. The Nixon administration successfully cited its authority under the 1917 Trading With Enemy Act, which preceded and supplied some of the legal language used in IEEPA. In May, the trade court rejected the argument, ruling that Trump's Liberation Day tariffs 'exceed any authority granted to the President'' under the emergency powers law. 'The president doesn't get to use open-ended grants of authority to do what he wants,'' said Reilly Stephens, senior counsel at the Liberty Justice Center, a libertarian legal group that is representing businesses suing the Trump administration over the tariffs. In the case of the drug trafficking and immigration tariffs on Canada, China and Mexico, the trade court ruled that the levies did not meet IEEPA's requirement that they 'deal with'' the problem they were supposed to address. The court challenge does not cover other Trump tariffs, including levies on foreign steel, aluminum and autos that the president imposed after Commerce Department investigations concluded that those imports were threats to U.S. national security. Nor does it include tariffs that Trump imposed on China in his first term — and President Joe Biden kept — after a government investigation concluded that the Chinese used unfair practices to give their own technology firms an edge over rivals from the United States and other Western countries.
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Business Standard
12 hours ago
- Business
- Business Standard
Triumphant in trade talks, Trump, his tariffs still face challenge in court
President Donald Trump has been getting his way on trade, strong-arming the European Union, Japan and other partners to accept once unthinkably high taxes on their exports to the United States. But his radical overhaul of American trade policy, in which he's bypassed Congress to slam big tariffs on most of the world's economies, has not gone unchallenged. He's facing at least seven lawsuits charging that he's overstepped his authority. The plaintiffs want his biggest, boldest tariffs thrown out. And they won Round One. In May, a three-judge panel of the US Court of International Trade, a specialised federal court in New York, ruled that Trump exceeded his powers when he declared a national emergency to plaster taxes tariffs on imports from almost every country in the world. In reaching its decision, the court combined two challenges one by five businesses and one by 12 US states into a single case. Now it goes on to Round Two. On Thursday, the 11 judges on the US Court of Appeals for the Federal Circuit in Washington, which typically specialises in patent law, are scheduled to hear oral arguments from the Trump administration and from the states and businesses that want his sweeping import taxes struck down. That court earlier allowed the federal government to continue collecting Trump's tariffs as the case works its way through the judicial system. The issues are so weighty involving the president's power to bypass Congress and impose taxes with huge economic consequences in the United States and abroad that the case is widely expected to reach the US Supreme Court, regardless of what the appeals court decides. Trump is an unabashed fan of tariffs. He sees the import taxes as an all-purpose economic tool that can bring manufacturing back to the United States, protect American industries, raise revenue to pay for the massive tax cuts in his One Big Beautiful Bill,' pressure countries into bending to his will, even end wars. The US Constitution gives the power to impose taxes including tariffs to Congress. But lawmakers have gradually relinquished power over trade policy to the White House. And Trump has made the most of the power vacuum, raising the average US tariff to more than 18 per cent, highest since 1934, according to the Budget Lab at Yale University. At issue in the pending court case is Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs without seeking congressional approval or conducting investigations first. Instead, he asserted the authority to declare a national emergency that justified his import taxes. In February, he cited the illegal flow of drugs and immigrants across the US border to slap tariffs on Canada, China and Mexico. Then on April 2 Liberation Day,' Trump called it he invoked IEEPA to announce reciprocal' tariffs of up to 50 per cent on countries with which the United States ran trade deficits and a 10 per cent baseline' tariff on almost everybody else. The emergency he cited was America's long-running trade deficit. Trump later suspended the reciprocal tariffs, but they remain a threat: They could be imposed again Friday on countries that do not pre-empt them by reaching trade agreements with the United States or that receive letters from Trump setting their tariff rates himself. The plaintiffs argue that the emergency power laws does not authorise the use of tariffs. They also note that the trade deficit hardly meets the definition of an unusual and extraordinary' threat that would justify declaring an emergency under the law. The United States, after all, has run trade deficits in which it buys more from foreign countries than it sells them for 49 straight years and in good times and bad. The Trump administration argues that courts approved President Richard Nixon's emergency use of tariffs in a 1971 economic crisis. The Nixon administration successfully cited its authority under the 1917 Trading With Enemy Act, which preceded and supplied some of the legal language used in IEEPA. In May, the trade court rejected the argument, ruling that Trump's Liberation Day tariffs exceed any authority granted to the President' under the emergency powers law. The president doesn't get to use open-ended grants of authority to do what he wants,' said Reilly Stephens, senior counsel at the Liberty Justice Center, a libertarian legal group that is representing businesses suing the Trump administration over the tariffs. In the case of the drug trafficking and immigration tariffs on Canada, China and Mexico, the trade court ruled that the levies did not meet IEEPA's requirement that they deal with' the problem they were supposed to address. The court challenge does not cover other Trump tariffs, including levies on foreign steel, aluminum and autos that the president imposed after Commerce Department investigations concluded that those imports were threats to US national security. Nor does it include tariffs that Trump imposed on China in his first term and President Joe Biden kept after a government investigation concluded that the Chinese used unfair practices to give their own technology firms an edge over rivals from the United States and other Western countries.
Boston Globe
13 hours ago
- Business
- Boston Globe
Triumphant in trade talks, Trump and his tariffs still face a challenge in federal court
In May, a three-judge panel of the U.S. Court of International Trade, a specialized federal court in New York, ruled that Trump exceeded his powers when he declared a national emergency to plaster taxes — tariffs — on imports from almost every country in the world. In reaching its decision, the court combined two challenges — one by five businesses and one by 12 U.S. states — into a single case. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Now it goes on to Round Two. Advertisement On Thursday, the 11 judges on the U.S. Court of Appeals for the Federal Circuit in Washington, which typically specializes in patent law, are scheduled to hear oral arguments from the Trump administration and from the states and businesses that want his sweeping import taxes struck down. That court earlier allowed the federal government to continue collecting Trump's tariffs as the case works its way through the judicial system. The issues are so weighty — involving the president's power to bypass Congress and impose taxes with huge economic consequences in the United States and abroad — that the case is widely expected to reach the U.S. Supreme Court, regardless of what the appeals court decides. Advertisement Trump is an unabashed fan of tariffs. He sees the import taxes as an all-purpose economic tool that can bring manufacturing back to the United States, protect American industries, raise revenue to pay for the massive tax cuts in his 'One Big Beautiful Bill,'' pressure countries into bending to his will, even end wars. The U.S. Constitution gives the power to impose taxes — including tariffs — to Congress. But lawmakers have gradually relinquished power over trade policy to the White House. And Trump has made the most of the power vacuum, raising the average U.S. tariff to more than 18%, highest since 1934, according to the Budget Lab at Yale University. At issue in the pending court case is Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs without seeking congressional approval or conducting investigations first. Instead, he asserted the authority to declare a national emergency that justified his import taxes. In February, he cited the illegal flow of drugs and immigrants across the U.S. border to slap tariffs on Canada, China and Mexico. Then on April 2 — 'Liberation Day,'' Trump called it — he invoked IEEPA to announce 'reciprocal'' tariffs of up to 50% on countries with which the United States ran trade deficits and a 10% 'baseline'' tariff on almost everybody else. The emergency he cited was America's long-running trade deficit. Trump later suspended the reciprocal tariffs, but they remain a threat: They could be imposed again Friday on countries that do not pre-empt them by reaching trade agreements with the United States or that receive letters from Trump setting their tariff rates himself. Advertisement The plaintiffs argue that the emergency power laws does not authorize the use of tariffs. They also note that the trade deficit hardly meets the definition of an 'unusual and extraordinary'' threat that would justify declaring an emergency under the law. The United States, after all, has run trade deficits — in which it buys more from foreign countries than it sells them — for 49 straight years and in good times and bad. The Trump administration argues that courts approved President Richard Nixon's emergency use of tariffs in a 1971 economic crisis. The Nixon administration successfully cited its authority under the 1917 Trading With Enemy Act, which preceded and supplied some of the legal language used in IEEPA. In May, the trade court rejected the argument, ruling that Trump's Liberation Day tariffs 'exceed any authority granted to the President'' under the emergency powers law. 'The president doesn't get to use open-ended grants of authority to do what he wants,'' said Reilly Stephens, senior counsel at the Liberty Justice Center, a libertarian legal group that is representing businesses suing the Trump administration over the tariffs. In the case of the drug trafficking and immigration tariffs on Canada, China and Mexico, the trade court ruled that the levies did not meet IEEPA's requirement that they 'deal with'' the problem they were supposed to address. The court challenge does not cover other Trump tariffs, including levies on foreign steel, aluminum and autos that the president imposed after Commerce Department investigations concluded that those imports were threats to U.S. national security. Nor does it include tariffs that Trump imposed on China in his first term — and President Joe Biden kept — after a government investigation concluded that the Chinese used unfair practices to give their own technology firms an edge over rivals from the United States and other Western countries. Advertisement
