When we last left Elon Musk and Donald Trump, Musk had followed through on his threat to quit Trump’s economic advisory council if Trump left the Paris climate agreement. But that didn’t stop Musk from lobbying Trump on Twitter over China’s car tariffs, right as Trump passed punitive tariffs on steel and aluminum. And Trump took the surprising tack of reading them out loud, seemingly to justify the move.
Musk, today, essentially complained that China was using its tariffs as protectionism, which, in turn, Trump read on the air, much to the surprise and consternation of many:
To be fair, Musk isn’t entirely wrong, but he’s also not telling the whole story. In fact, if anything Musk is lowballing the cost, as China doesn’t just charge a 25% tariff on assembled cars, but also a 17% value-added tax. What he left out is that the easy way around this tax is to form a joint venture in China and start building cars there. Of course, this would involve teaching Chinese engineers about Tesla technology, which likely would not go over well with some in the Trump administration.
But the biggest omission from Musk is about just who he’s really competing with. The top Chinese automaker isn’t a state-run auto company or an also-ran enjoying government protection. It’s General Motors, which has 10% of the Chinese automotive market, and the majority of the market is controlled by foreign automakers. And you’ll have to work pretty hard to find a Chinese car on American roads; Chinese cars aren’t usually built to American quality standards. In fact, in terms of cars, we have a trade surplus with China.
So, while the facts aren’t necessarily wrong, there’s a lot being left out. Besides, you have to wonder why Musk is complaining about exports, as his company is having trouble hitting its shipping dates with its Model 3.