‘It’s like running a race in lead shoes’
Elon Musk weighs in on drastic difference in tariffs between China and the US
Tesla CEO Elon Musk waded into President Donald Trump’s battle over America’s trade deficit with China on Thursday, launching a tweetstorm about tariffs on auto imports — an issue of extreme interest to the Palo Alto electric car maker.
Trump did not respond on Twitter, but in a press conference announcing import tariffs of 25 percent on steel and 10 percent on aluminum, with Canada and Mexico initially excluded, the president cited one of Musk’s tweets as an opening to reveal plans for tit-for-tat tariffs in the future.
Musk, who like Trump is a prolific user of Twitter, took to the social media platform to suggest that drastic differences between the U.S. and China in the size of tariffs on car imports mean American vehicle manufacturers are“competing in an Olympic race wearing lead shoes.”
The Tesla chief and SpaceX CEO started off his tweetstorm Thursday around 10 a.m. with a response to a tweet by Trump about the trade
deficit, pegged at about $21 billion a month in China’s favor.
“Do you think the US & China should have equal & fair rules for cars? Meaning, same import duties, ownership constraints & other factors,” tweeted Musk.
Musk, who last year removed himself from two of Trump’s advisory councils — the Manufacturing Jobs Initiative and the Strategic and Policy Forum — over the president ’ s decision to withdraw from the Paris Climate Accord, followed up with another tweet.
“For example, an American car going to China pays 25% import duty, but a Chinese car coming to the US only pays 2.5%, a tenfold difference,” Musk tweeted.
Musk, whose company cited tariffs in its most recent annual report as a threat to Tesla’s international operations, went on to write in another tweet that he was against import duties in general, “but the current rules make things very difficult.”
The U.S. is pushing China to reduce its annual trade advantage by $100 billion, the Wall Street Journal reported Thursday, citing people said to be familiar with talks between the two countries.
China is the largest car market in the world, according to Statista. Tesla reported last year that it had sold $1 billion worth of its electric vehicles in China in 2016, then this year reported it had doubled that figure to more than $2 billion in 2017.
Tesla has reportedly been negotiating with China about building a factory in Shanghai, which would allow Tesla sales in China without tariff payments, but Musk has said production wouldn’t start till 2020 at the earliest. Bloomberg reported in February that Tesla wants to own the en- tire factory while China mandates a joint venture with local partners.
A 25 percent import tariff on Teslas shipped to China “catapults the sticker price beyond the means of most consumers” and givesmanufacturers of cheaper electric vehicles an advantage over Tesla, according to Bloomberg.
Musk continued to push the car-tariff issue Thursday via Twitter.
“Also, no US auto company is allowed to own even 50% of their own factory in China, but there are five 100% China-owned EV auto companies in the US,” he tweeted.
Then he added that his company had brought the matter up with the administration of former President Barack Obama and “nothing happened.”
“Just want a fair outcome, ideally where tariffs/ rules are equally moderate,” Musk tweeted. “Nothingmore. Hope this does not seem unreasonable.”
Trump’sWhiteHouse last year pointedly noted that China’s import tariffs on U.S. cars contributed to the U.S. trade deficitwith China, Quartz reported.
In a press conference Thursday afternoon announcing the steel and aluminum tariffs, Trump cited Musk’s tweet about the cartariff differential between the U.S. and China.
“We send our car over there, pay 25 percent,” Trump said. “They send their car over here, 2.5 percent.
“That’s fromElon, but everybody knows it. They’ve known it for years. They never did anything about it. It’s got to change.”
Trump then announced plans for future “reciprocal taxes” or “mirror taxes” through which the U. S. would match tariffs imposed by other countries. The President did not specifywhich goodswould be involved, and did not provide details, other than mentioning China and India, and saying of the reciprocal taxes, “We’re going to be doing a lot of that.”