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Let’s just start this off by saying that Donald Trump doesn’t have a lot of deep longstanding beliefs on topics that don’t directly concern him. And he’s one of the most transactional politicians I’ve ever seen, in a world of course where politicians are exceptionally transactional. We assume many things on Trump based on the past, but a couple of things can change and he can flip in another direction. If he think he can get something from you, he can change his “beliefs” 100% or even 200% and go in another direction.
And then we’ve got Elon Musk, who is apparently not all that much different. Well, this is clearly the place to start. While Donald Trump has talked very critically and combatively about China for several years, Elon Musk has been very positive about China and has now based half of Tesla’s global production capacity there. Tesla was the first automaker of any kind given permission to build its own factory there without a joint venture with a Chinese company. Clearly, he has been granted special attention and favors in China.
So, what happens now if Musk, who is a key part of Trump’s team now, is standing by Trump while he’s trashing China? What happens if Trump does go forward with bigger tariffs on Chinese-produced products? Is Tesla’s position in China threatened if Trump doesn’t play nice on China? Frankly, with the flick of a switch or one phone call, Tesla’s production and sales in China could be demolished. Perhaps President Xi Jinping wouldn’t go that route. Or perhaps he would.
But let’s assume something else. Let’s assume Musk gets Trump to soften his rhetoric and approach on China. Let’s say Musk somehow transfers who deferential and respectful he is to Xi Jinping on to Trump and Trump starts treating Xi Jinping more how he treats Vladimir Putin. Then what? How does China’s relationship with the US change? (And let’s not discount the fact that Trump was recently having his campaign fundraiser Bibles made in China.)
This article was triggered by news I saw this morning that Xi Jinping has called to congratulate Trump. “Xi urges China, U.S. to manage differences properly,” Reuters reports. “Xi calls for mutual respect, strengthened dialogue.” It seems that Xi would like to have a better relationship with the US again, and, frankly, are any of Trump’s fanatical cult followers going to care if Trump turns 180 degrees on China? Do any of them care if he’s pro-tariff or anti-tariff with China? Trump campaigned partly on putting big tariffs on Chinese goods, and stubbornly said this wouldn’t raise prices for Americans, but some segments of the stock market are already reacting negatively to that, and we know Trump doesn’t want to be unpopular, especially on Wall Street. Also, Reuters notes, “China faces major growth risks from threatened tariffs of 60%.” Xi Jinping may be extra keen to “find a solution” with Trump and play whatever stupid flattery game Trump wants to avoid a growing trade war. Could Musk convince Trump to go this route? What anti-China people are on Trump’s team who have a bigger voice with him?
Of course, as someone I talked to today who was thinking about these same matters noted, Trump wants to be the center of attention and get the praise for everything. He and Musk aligned to achieve a common goal, but will Trump get tired of him, bored of him (he has reportedly called Musk boring and weird in private), and annoyed by him taking his spotlight and interfering with his plans for China? Will Musk soon find what countless others have found, that everything Trump touches dies and rots? Or is this an alliance and bromance that will growing during the next four years?
Assuming Trump changes course on China, what could that mean more broadly? Will tariffs on EVs and solar panels come down? Will Chinese EVs finally come to America and destroy complacent and distracted American automakers? Musk has predicted that would happen and certainly wouldn’t care; he may even invite it. Trump presumably hasn’t gotten the praise and support from GM and Ford that he’d like, and certainly not from the United Auto Workers union, an arch nemesis of Elon Musk. Perhaps he’d change course and happily let Chinese automakers come in and threaten the US auto industry.
All of those EV battery plants, solar panel factories, EV battery mineral mines and refineries that were expected to help rebuild working class, blue collar leadership in the US — are they going to be dead in the water if Trump lets the Chinese in with 0% tariffs?
I don’t think anyone really knows where all of this goes. A lot of it could simply come down to personal dynamics between Elon Musk and Donald Trump. They seem rosy at the moment. But they haven’t always been.
In 2022, Musk said that it was “time for Trump to hang up his hat & sail into the sunset.” And Trump responded on Truth Social:
“When Elon Musk came to the White House asking me for help on all of his many subsidized projects, whether it’s electric cars that don’t drive long enough, driverless cars that crash, or rocketships to nowhere, without which subsidies he’d be worthless, and telling me how he was a big Trump fan and Republican, I could have said, ‘drop to your knees and beg,’ and he would have done it.”
Who won that debate?
“Now Elon should focus on getting himself out of the Twitter mess because he could owe $44 billion for something that’s perhaps worthless,” Trump added. Well, you have to say Trump was more right than wrong on that as well — from a financial perspective. However, from a political perspective, Twitter/X has probably proved quite valuable to Musk. Let’s see where things go from here, though.
Coming back to the China–US topic, China Daily, a state-run newspaper, added: “new beginning in China-US relations, if the chance that has been offered is not wasted.”
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