US President Donald Trump has said several times that the US is getting unfairly treated when it comes to trade. Tesla (TSLA) CEO Elon Musk seems to agree.
The US is getting unfair trade treatment
President Trump has said multiple times that the US isn’t getting fair treatment from its trade allies. Trump’s tariffs on China have been getting all the attention. However, the administration is trying to renegotiate trade deals with several other countries. Trump has specifically called out Europe and India for unfair trade treatment. As for China, yesterday, Trump announced an additional 10% tariff on $300 billion worth of Chinese goods. Another $250 billion worth of Chinese goods already attract a 25% tariff. Once the new tariffs come into effect, practically all Chinese imports will attract tariffs in the US.
Musk seems to agree with Trump
Last year, President Trump imposed a 25% tariff on US steel imports and a 10% tariff on aluminum imports. In general, US automakers didn’t like the tariffs, which they expected would increase their steel and aluminum costs. Ford Motor Company (F) said last year that the tariffs would cost it $1 billion in profits. However, when Trump announced the tariffs, Musk gave them an upvote. Musk said, “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.”
At his press conference, Trump mentioned Musk’s tweet to drive home the point that the US is getting unfairly treated on trade. Initially, Musk was part of Trump’s economic advisory council. However, Musk quit the position after Trump pulled out of the Paris climate deal.
Musk on India’s tariffs
On multiple occasions, President Trump has cited the high duties India imposes on Harley-Davidson bikes. Trump sees it as another example of unfair trade treatment. According to Trump, while India charges a hefty tariff on Harley-Davidson bikes, the US doesn’t charge any tariffs on Indian motorcycles. Musk, too, has pointed to high tariffs in India. When asked when Tesla would enter the Indian market, he replied, “I’m told import duties are extremely high (up to 100%), even for electric cars. This would make our cars unaffordable.”
Trade war escalation
Meanwhile, China said it would retaliate against Trump’s tariffs as it’s done in the past. While this time, China might not be able to impose tit-for-tat tariffs, it could look at alternate strategies. Incidentally, last year, China increased tariffs on vehicle imports from the US. However, after the meeting between President Trump and Chinese President Xi Jinping, China lowered the tariffs. If the US-China trade war escalates, US automotive companies such as Ford and General Motors (GM) could be affected.