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

Posted by BeauHD on from the short-end-of-the-stick dept.

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.

18 of 331 comments (clear)

  1. Good by Anonymous Coward · · Score: 5, Insightful

    You can't have free trade if its free trade in only one direction.

    1. Re:Good by alvinrod · · Score: 5, Insightful

      It doesn't matter and tariffs are a bad idea even if they're unilateral. Yes, it sucks for the individual business that has a disadvantage, but for the economy as a whole, free trade is what is most beneficial. If China wants to subsidize a particular industry, Americans are better off buying the cheaper goods at China's expense. It's essentially the Chinese paying for Americans to have less expensive products. You might complain that China (or rather individual businesses in China) ends up with a lot of American dollars that American businesses no longer have instead, but China does not benefit from hoarding dollars (inflation will render them worthless in due time) so it has to find something to spend them on which means purchases from or investment in American businesses or anyone else who will accept those dollars as payment.

      Free trade is what ensures that consumers are able to get their goods at the lowest cost possible. I recently saw a homeless person with an Android phone. Were it not for inexpensive Chinese manufacturing, I'm not sure this individual would have had that phone. Tariffs on steel and aluminum will just mean that products become more expensive or that fewer are made. Trump is a fool for thinking that this will somehow help Americans. If he's truly concerned with predatory practices (e.g., dumping) the WTO already exists to handle such issues. As much as people want to rag on globalization, it's what is getting more consumer goods into the hands of people all around the world and has drastically reduced the cost of goods to the point where even the most impoverished are starting to have things like smart phones and internet connectivity.

    2. Re:Good by imgod2u · · Score: 5, Informative

      We've had a 25% tariffs on trucks for decades. Trucks also happen to be the most profitable cars people make.

      We've just never bothered with low-margin cars (sub-20k) because it's not useful to have the low-margin stuff done domestically.

      Anyone who tells you America has not been "America First" is either ill-informed, deceiving you or both.

    3. Re:Good by Luckyo · · Score: 5, Interesting

      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.

    4. Re:Good by HeckRuler · · Score: 4, Insightful

      and by not having to comply with the same environmental standards that the US has to comply with.

      I understand this sentiment, but it's really infeasible to try and balance. Plus, they ARE paying for it. One way or another. If a US company has to spend $5 million dealing with pollution, and a Chinese company can dump it out the back door, the Chinese company will have the advantage, no doubt. But there's no way we could expect Kenya to have the same standards that the EPA sets forth. The nation just isn't there yet. And China wasn't NEARLY as advanced in years past when these deals were set up. To an extent, their infrastructure is still pretty rickety, but they have the cash to at least try and fix it now. But even with developed nations, imposing trade deals on the basis of how their EPA equivalents operate isn't likely to work. Trade deals take years and last decades while environmental policy fluctuates each term. It got cut to the bone this time. It sucks. Anyway, I just don't think it's viable.

      And, they're paying for it. China is hella polluted. To the point it's killing people. This is, essentially, the Chinese government abusing it's people to make a buck. It might make the nation more money, but the people are paying for it with their health. As a democracy over here, the people got pissed at that sort of shit and we formed the EPA way back during the hippy era under that notorious greeny weeny Nixon. China's abuse of it's peasantry for the good of the economy goes deeper too, and more directly results in the trade deficit. They suppress their currency. They used to keep it strictly pegged to the USD, but they've let it slip a bit. It artificially REDUCES China's buying power, and makes selling Chinese goods that much easier. Imagine if Trump came around and said "We're devaluing the USD, now it'll cost you twice as much to purchase anything abroad. But hey, if you export, you'll make twice as much." That's what China did. If you're exports, hey, goooood times. If you earn Chinese Renminbi, and want to travel or buy foreign goods.... sucks to be you.

      Both of these are, in short, taxes. Not quite the same as a direct tax of cash out of their wallets, but a tax all the same.

      Now.... when it comes to the US's policy towards this. We could:

      A) Punish China and limit trade in an effort to get them to stop abusing their workers.

      B) Buy the highly discounted goods that they're selling at discount at the cost to their citizenry

      And you're advocating for option A. That's uncharacteristically altruistic considering the "America first" and "MAGA" slogans that side's been throwing about. Realize that prices will RISE for everyone and the only people that would benefit from this sort of trade war would be competitors to Chinese manufacturing, pretty much US manufacturing. If you work in manufacturing (or own a car manufacturer), sure, this is voting for the wallet. And I get that. The rest of us essentially have to pay for it though. Also, trade wars are not a zero sum game. Blocking trade (or restricting via tariffs) hurts BOTH sides more than either side was losing prior. A trade-war between giants is a godsend to the little manufacturing nations out there.

  2. My biggest surprise... by Cute+Fuzzy+Bunny · · Score: 5, Funny

    ...was learning there are Chinese car manufacturers.

    Ya know why the English don't build computers?

    They haven't figured out how to make them leak oil yet.

  3. Since when did commie capitalists play fair? by cahuenga · · Score: 5, Insightful

    If you are anti-tariff then you should oppose tariffs from your competitors as well and move to incentivise their removal. Retaliatory tariffs are a reasonable option.

  4. If China charges us 25% by Ichijo · · Score: 4, Interesting

    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.

    --
    Any sufficiently unpopular but cohesive argument is indistinguishable from trolling.
  5. About fucking time by WindBourne · · Score: 5, Insightful

    China agreed to play fair, but went from 90 tariffs to over 500, and most are killer. It is long past time for president to call china gov on this BS.

    --
    I prefer the "u" in honour as it seems to be missing these days.
  6. Misleading Headline by quantaman · · Score: 5, Insightful

    Despite the CNBC (and Slashdot) headlines Elon Musk didn't actually side with Trump.
    He just tweeted at Trump that China was charging duties on US cars, and restricting US ownership of car factories in China, but the US wasn't doing the same in return.

    And since Trump was in a mood to make tariffs Musk's reasonable sounding tweet is now well on its way to becoming policy.

    Is anyone here really famous and has a 140 (280?) character argument about why a certain tariff should be enacted?

    This is your opportunity to write US policy!

    --
    I stole this Sig
  7. Define reciprocal by Solandri · · Score: 5, Insightful
    In the 1980s, Korea had a ridiculously high tax on cars to try to keep traffic under control. Hyundai was selling their base model for $9,995 in the U.S. But the same car in Korea was taxed to about $30,000. One of the 1988 Presidential candidates made an issue of it, complaining that Hyundai could sell their cars in the U.S. for $10k, but a similar Ford Escort was taxed to cost $30k in Korea (he conveniently left out that the Hyundai also cost $30k in Korea).

    So which reciprocal is the right way to do it?
    • Taxing imports at the same rate the originating country taxes your exports sounds like it would be fairer. But it destroys the ability to use tax policies to modify behavior unique to each country. Korea was forced to repeat their vehicle tax. Suddenly half the population was able to afford cars, and the streets immediately became gridlocked.
    • If you consider it fair if a country applies taxes evenly regardless of the product's origin, then a country could tax an industry with little domestic presence up the wazoo and still claim it's being fair. The U.S. imports a lot of lumber from Canada, while almost no U.S. lumber is exported to Canada. So the U.S. could impose a tax on lumber sales which would disproportionately affect Canadian imports while doing little economic harm to itself.

    tl;dr - There is no right answer. A policy which is fair in one dimension is unfair in an orthogonal dimension. And vice versa. Everyone wants there to be one best, right solution. But in a lot of cases, no such solution exists.

  8. Protectionism Doesn't Work That Way by mentil · · Score: 4, Interesting

    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.

    --
    Corruption is convincing someone that the selfless ideal is the same as their selfish ideal.
  9. We are Free Traders but by oldgraybeard · · Score: 4, Insightful

    others are not!! If their markets are not open to us why should we have a completely open market to them.

    So lets do this, our tariffs will be the exact same as yours!

    You free trade with us, we free trade with you!

    I have no problems with these tariffs

    Just my 2 cents ;)

  10. Re:Thanks to the NHTSA, that shouldn't be problem by 110010001000 · · Score: 4, Informative

    Really? How odd. I see Volvo S60s driving all over the place here. Where do you think they are made, and who do you think owns the company? You guys are so cute!

  11. Meanwhile in Brazil.... by hneiva10 · · Score: 5, Informative

    Meanwhile in Brazil import taxes on cars are roughly 115% Breakdown: http://thebrazilbusiness.com/a...

  12. Japan only allows so many American cars to be sold by BrookHarty · · Score: 4, Informative

    Japan exported more than 1.6 million vehicles to America in 2015, while the U.S. sold less than 19,000 vehicles to Japan, accounted for about .03% of the five million cars and light trucks sold in Japan.

    Japan taxes engine size and emissions. The annual tax on a vehicle with a 4-liter engine, an American pickup, is ¥76,500. Japan is the only developed country in the world with such a tax, so over a 10-year period, it would add up to the equivalent of a 12 percent import tariff.

    I couldn't find the import limits, but remember seeing a limit on how many cars per maker was allowed. Not sure if thats still a trade issue.

    Of course, the new theory is Americans gave up importing cars, because Japan has high tastes and want quality customer service and its too hard to serve them.

    Obama even tried to fight for American imports into Japan.
    https://www.detroitnews.com/st...

  13. hummmm by jmccue · · Score: 4, Insightful

    Lets see, someone who makes overly expensive electric cars wants to slap a tariff on cars made in China. Call me Capt. Obvious.

    If I remember correctly China is pouring a lot into electric vehicles.

  14. Brains by ghoul · · Score: 4, Interesting

    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.

    --
    **Life is too short to be serious**