Elon Musk Sides With Trump On Trade With China, Citing 25 Percent Import Duty On American Cars (cnbc.com)

Elon Musk believes China isn't playing fair in the car trade with the U.S. since it puts a 25 percent import duty on American cars, while the U.S. only does 2.5 percent for Chinese cars. "I am against import duties in general, but the current rules make things very difficult," Musk tweeted. "It's like competing in an Olympic race wearing lead shoes." CNBC reports: Tesla's Elon Musk is complaining to President Donald Trump about China's car tariffs. "Do you think the US & China should have equal & fair rules for cars? Meaning, same import duties, ownership constraints & other factors," Musk said on Twitter in response to a Trump tweet about trade with China. He added that no American car company is "allowed to own even 50% of their own factory" in the Asian country, but China's auto firms can own their companies in the U.S. Trump responded to Musk's tweets later at his steel and aluminum tariff press conference Thursday. "We are going to be doing a reciprocal tax program at some point, so that if China is going to charge us 25% or if India is going to charge us 75% and we charge them nothing ... We're going to be at those same numbers. It's called reciprocal, a mirror tax," Trump said after reading Musk's earlier tweets out loud.

Comments

If China charges us 25%

[Ichijo]

Then let's charge them 24.9% in order to show some leadership toward reducing tariffs. Then if they lower theirs to match, we'll lower ours again. Let's race to the bottom, because reciprocal tariffs ("an eye for an eye") won't get us to that goal.

Protectionism Doesn't Work That Way

[mentil]

India charging a 75% import duty on American cars would be to protect domestic production. They don't care if we won't buy their cars... because they're not trying to sell us any, anyways. What they WOULD BE trying to do is make sure American auto manufacturers can't outcompete the domestic producers, in the domestic market, thus driving the domestic producers out of business. Having the independent ability to manufacture cars is useful if, say, India were to go to war with the USA, or if India were blockaded by China.

I'd expect Musk to care more about Chinese solar panels than Chinese cars.

Re:Good

[Luckyo]

There is a reason why current free trade is set the way it is. Because US was the party that set it up in Bretton-Woods, and because for US, free trade is not about trade. It's about security. US itself didn't actually invest into the free trade mechanisms it created, and foreign trade as a portion of national GDP in US is very low compared to developed world average. As a point of comparison, even Afghanistan, a land locked, war torn country has a higher portion of foreign trade as national GDP than US. Look it up if you don't believe me.

And of that foreign trade, overwhelming majority is within NAFTA. I'll talk why in a moment.

Essentially US bribed together a coalition of the willing to fight Second World states by opening its markets to allies and neutral states. The only market that survived WW2 more or less intact. And it worked great. It won the Cold War. And ever since then, free trade has been coasting on inertia, with US still upholding the security apparatus that enables it to function, while having no security benefit from it any more.

And in the end of last year, the last primary chain that linked US to global trade markets broke. NAFTA as a region became a net exporter of oil and its derivative products. US is now in a position where it could have an absolutely devastating trade policy, and economically, it would only take a minor hit. The rest of the world on the other hand, having been built on the economic order that requires backing by the US security apparatus would likely collapse. Consider China for example. It is completely dependent on global maritime routes. At the same time it does not have any capability of guaranteeing security of any of the long haul routes. It is completely dependent on US good will in continuing its role as a security guarantor. Same applies to all potential major antagonists in a potential trade war - Russia, Germany, France, Brazil, etc. Name a major state, it depends on safe maritime trade, while having no ability to guarantee security for this trade against hostile state actors.

In this geopolitical situation, it's clear that renegotiation of free trade in relationship to US and services it provides to enable it will be required to keep US involved in the system. It will have to either be a new kind of a security pact, or it will have to be more of a give and take relationship. So far, Trump's actions indicate that he's interested in give and take. And make no mistake - this would have happened regardless of who got elected. Under Clinton, this would probably have been an eight year process with full powerpoint presentations and long and complex negotiations.

Trump is more impulsive and rash, so the process is moving much faster. But the push in this direction has been present ever since Soviet Union fell, and with shale severing that last link that kept US dependent on free trade as it is currently operating, current direction is inevitable.

We live in interesting times.

Brains

[ghoul]

You forgot the US is still severely dependent on one import even after Shale. Brains. The US does not domestically produce enough smart people to keep running the high technology economy and is severely dependent on importing brains. If the US plays hardball with the home countries the US will lose its image of a nice country to emigrate to and will suffer from a brain shortage. It could then downgrade its economy to a less technological one or reverse its trade policies.