A Tesla investor and fund manager explains why the volatility from Trump's tariffs hasn't changed his stock picks

• Christopher Tsai's investment firm, Tsai Capital, manages a $137 million portfolio.
• Tsai told BI that President Donald Trump's tariff announcements have not altered his investments.
• Tsai said businesses won't have enough time to adjust even with Trump's 90-day pause on tariffs.

President Donald Trump's on-and-off again tariff announcements have sent the market whipsawing in the past week.

But investor Christopher Tsai says the current market volatility has not spurred him to alter his investment strategy.

"So the current market volatility does not impact how we are thinking about holding these businesses over the long term. In fact, market volatility has often proven to be beneficial for us because volatility can come with opportunity," Tsai told Business Insider on Monday.

Tsai, 50, is the president and chief investment officer of the investment management firm Tsai Capital. He manages a $137 million portfolio that includes holdings in companies like Tesla and Apple.

"I think it's too soon to tell if the tariffs will lead the world into a recession," Tsai said. "It primarily depends upon how long and to what extent the tariffs remain in place."

On April 2, Trump announced reciprocal tariffs for over 180 countries on what he called "Liberation Day."

A baseline rate of 10% went into effect on April 5. A higher set of tariff rates that varied by country took effect on Wednesday before Trump announced a 90-day pause on the same day.

The pause, however, does not apply to China. Trump had already imposed a 20% tariff on China last month. He initially announced a 34% reciprocal tariff on China on April 2 before hiking it up to 145% last week. China has retaliated with a 125% tariff on US imports.

"I don't agree with the approach of starting an all-out economic war, but I do give him credit for following through on the threat of tariffs," Tsai said of Trump's recent tariff announcements.

Tariffs have long been a fixation of Trump's. Besides waging a trade war with China in his first term, Trump often talked about placing tariffs on foreign countries and companies while on the campaign trail last year.

"By doing so, Trump showed the world he was not bluffing and that he was willing to inflict some degree of domestic pain in order to demonstrate how serious the impact of the tariff would be on other countries," Tsai said, adding that countries like Japan and South Korea are now eager to start negotiating with the US.

Last week, Treasury Secretary Scott Bessent said almost 70 countries had approached the Trump administration on starting trade talks.

"Trump's use of credible threats and a tit-for-tat retaliation on China is consistent with game theory. A back-and-forth negotiating style might appear inconsistent, but is not necessarily inconsistent with a strong position," Tsai said.

Businesses won't have enough time to adjust even with a 90-day pause on tariffs

Tsai told BI that he was more concerned about Trump's 90-day pause on tariffs and whether it will be extended.

"I think that Trump is fully aware of the difficulties companies will have if they are not given enough time to adjust their operations to a new cost structure, and that's why he has paused some reciprocal tariffs and exempted certain goods," Tsai said.

"It's unclear, and intentionally unclear, whether 90 days will wind up being 180 days. But I want to stress that, unfortunately for many businesses, that's just not enough time to adjust," Tsai added.

Tsai said he had spoken to several business owners. Some told him that they are adopting a wait-and-see approach to their investments, while others are proactively shifting their supply chains to other countries.

The impact of Trump's tariffs on small and medium-sized businesses that aren't able to adjust could be what tips the US into recession, Tsai said. Small and medium-sized businesses represent about 44% of America's GDP, per the US Chamber of Commerce.

"This is a lot more than numbers. People's jobs are at stake and businesses that have been thriving and contributing to the economy for years are all of a sudden in an extremely different situation. That's worrisome to me," Tsai said.

Tesla is in an 'even better position' after Trump's tariffs news

Trump's tariffs have drawn criticism from business leaders and experts, including one of Trump's biggest backers, Elon Musk.

Musk recently called for a "zero-tariff situation" and a "free trade zone" between the US and Europe. The Tesla and SpaceX CEO also criticized Trump's top trade advisor, Peter Navarro. Musk said Navarro was "dumber than a sack of bricks" after he called Musk a "car assembler."

But Tsai believes Tesla is in an "even better position" than before Trump's tariff announcement.

"We think that tariffs are a relative positive for Tesla as Tesla vehicles become relatively cheaper than competing vehicles. That's because Tesla has a 100% US production footprint, and almost all of its component parts come from within the United States," Tsai said.

Tesla shares make up a large part of Tsai's portfolio. In an SEC filing on February 12, Tsai Capital said it owned 69,700 shares, or about one-fifth of its portfolio.

Tesla shares have slid by nearly 50% from their record highs. The automaker's shares closed at about $252 on Monday, down from a peak closing price of $479 in mid-December.

The company initially enjoyed a postelection boost after Trump's November election victory, but it has since seen a drop in sales in Europe and China.

Musk's work with the White House DOGE office has also hurt Tesla, as the company's showrooms and vehicles have become targets for protesters and vandals.

Tsai told BI last month that Tsai Capital had started buying Tesla stock again. He said Musk's involvement with the US government was a "significantly positive event" for Tesla and "negative market sentiment will disappear at some point."

"There's always been issues with any company, including Tesla. The way we look at it is that Tesla has a very small share of a growing pie that will eventually result in a pie almost entirely composed of electric vehicles," Tsai said on Monday.

"So we don't get too caught up with what might be happening in any given month and miss the forest for the trees," he added.