Donald Trump and Elon Musk's relationship could break down because of China

Elon Musk's ties to China could harm his relationship with Donald Trump and therefore his position in the Cabinet, experts told Newsweek.

The CEO of Tesla and SpaceX has been named to lead the new Department of Government Effectiveness alongside former Republican presidential candidate and entrepreneur Vivek Ramaswamy.

“These two wonderful Americans will lead the way for my administration to dismantle government bureaucracy, cut excessive regulations, cut wasteful spending, and restructure federal agencies,” Trump said in his announcement.

It comes after Musk, who is the world's richest man, spent tens of millions of dollars helping Trump get elected and was one of his strongest supporters throughout the campaign.

But there is one thing that experts say could cause a rift between Musk and Trump: China.

Elon Musk and Donald Trump at a campaign rally on October 5, 2024 in Butler, Pennsylvania. Trump and Musk could argue over his China policy, experts told Newsweek. Elon Musk and Donald Trump at a campaign rally on October 5, 2024 in Butler, Pennsylvania. Trump and Musk could argue over his China policy, experts told Newsweek. Photo by Anna Moneymaker/Getty Images

“Trump and Musk might argue because Musk ends up opposing tough economic policies toward China,” Neil Thomas, a researcher at the Asia Society Policy Institute, told Newsweek.

Newsweek reached out to Musk and Trump's transition team via email for comment.

The president-elect named prominent China hawks Marco Rubio and Mike Waltz as secretary of state and national security adviser, respectively, in a sign of his hostile approach to the country. He also threatened to impose 60% tariffs on all Chinese exports to the United States and sanction the manufacturing of Chinese electric cars in Mexico to circumvent the tariffs, as well as eliminate more privileges Beijing's remaining trade interests, possibly triggering a trade war with the country.

“Tariffs are the greatest thing ever invented,” Trump said in September in Flint, Michigan. He also claimed that imposing tariffs was necessary because of the $800 billion trade deficit between the United States and China.

“We currently have an $800 billion trade deficit with the world. So think about that. Let's say we have between 500 and 375, but let's say we have 500 with China, but we have a total of 800 with the world It would mean China is more than half so we're going to take care of it and, frankly, it's going to make us a much stronger and much richer nation,” he said in a. speech in 2018.

By contrast, Musk – whose Tesla company has a “gigafactory” in Shanghai, making cars for the Chinese domestic market as well as Australasia – was careful not to criticize the Chinese Communist Party.

“China is great,” he said on Automotive News' Daily Drive podcast in 2020. He also congratulated the CCP on its 100th anniversary and was even once offered permanent residency in China.

Meanwhile, when China asked Tesla to modify its cars in 2021 and recalled more than 285,000 vehicles over safety concerns, Musk immediately complied. Musk has also complied with Tesla vehicle recalls in the United States.

And when China closed a Tesla factory in 2022 for four days in order to comply with a city-wide lockdown order from the Chinese government amid rising coronavirus cases, Musk quietly complied , despite its reluctance in similar situations in the United States. For example, when California shut down a Tesla factory during the coronavirus outbreak in spring 2020, Musk claimed the state's health officials were “fascist.”

In 2022, China accounted for approximately 22.5% of Tesla's total revenue, with China poised to become the world's largest market for electric vehicles.

Musk has also expressed concerns over rising tensions between the United States and China in the past. “I think that should be of concern to everyone,” Musk responded when asked if he was concerned about “the growing belligerence” between the United States and China during an interview with CNBC.

Earlier this year, he criticized the Biden administration for increasing tariffs on Chinese electric vehicles to 100%. “Neither Tesla nor I asked for these prices,” the multibillionaire said at a technology conference in Paris. “Things that hinder free trade or distort the market are not good,” he added. “Tesla is quite competitive in the Chinese market, without tariffs or deferential support. I support no tariffs.”

Laura Smith, a presidential historian at Oxford University, added that Musk's nomination could be a sign of Trump's “lack of decisive policy” on China, which could lead to two men quarreling.

“Looking back at the first Trump administration, it's remarkable how many staffers he fell out with over questions of personal loyalty rather than substantive policy issues. This arguably reflects, at first glance, At the time, Trump's lack of political experience made him less committed to definitive policies.

“It remains true that Trump is not a policy buff, but he may have more disagreements in his second term due to his increased exposure to different issues. The fact that he has chosen to serve people with “diverse views on China may indicate his current mandate lacks decisive policy,” she told Newsweek.

But while there is a risk of a rift between the Tesla CEO and the president-elect, Smith and Thomas agree that Musk could very well end up shaping Trump's China policy, improving his relationship with that country.

“Now that Trump and Musk seem so close, it would seem that Trump would want to keep him on his side given the wealth of resources Musk has to denigrate an opponent,” Smith said.

Thomas added that Trump is ultimately “a business owner who respects Musk's success” and that, therefore, “their close relationship could lead to the new president becoming more targeted in his China policy and falling out with the security hawks on his foreign policy team.”

Other experts have argued that Musk could be the new Kissinger in China, helping broker a deal between Washington and Beijing. American diplomat Henry Kissinger, who died in 2023, is credited with normalizing relations between the United States and China after his historic visit to Beijing in July 1971. Highly respected in China, he continued to engage with its leaders as as an unofficial envoy, recently meeting with the president. Xi Jinping in July 2023, just months before his death.

“There has been great curiosity in China in recent months about whether Musk could be the new Kissinger, helping broker a deal between Washington and Beijing,” said Scott Kennedy, senior adviser and chairman of the board for Chinese business and economics at the Center for Strategic and Economics. International Studies, told CNBC News this week.

“It is difficult to know at this stage whether this is an ingenious idea that will help prevent relations from imploding or an unrealistic appeasement scenario that the Chinese want to propose to themselves,” he said. he added.

In April, Musk met with Chinese Premier Li Qiang, who cited Tesla as an example of successful business cooperation between Beijing and Washington, according to state media.

Wang Yiwei, director of the Institute of International Relations at Renmin University, told CNBC that Musk's standing among the Chinese could see him persuade Trump to reverse the strict tariff hikes he has threatened, as well as than allowing Chinese companies to build factories in China. the United States

But Dewardric McNeal, managing director of Longview Global and senior policy analyst, was not as optimistic.

He told CNBC that while Musk could open some doors, none could be opened through steadfast diplomacy. He warned that relying on someone whose primary loyalty lies with his own businesses could be a mistake. “Musk's unpredictability and strong, often controversial opinions do not always align with the diplomatic or strategic interests of either country,” he said.

Donald Trump and Elon Musk's relationship could break down over China Donald Trump's relationship with Elon Musk could break down over China Photo-illustration by Newsweek/Getty

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