As the Trump administration boasts some optimism in regards to negotiating trade deals with China, Tesla CEO Elon Musk has requested they focus on fair automotive import tariffs and factory ownership restrictions. The current trade deal for automakers between China and the U.S. isn’t set up in an equal fashion. Musk has raised similar concerns with the previous administration, but to no avail.
Do you think the US & China should have equal & fair rules for cars? Meaning, same import duties, ownership constraints & other factors.— Elon Musk (@elonmusk) March 8, 2018
When an American car is sole in China, it faces the penalization of a 25-percent import duty, where if a Chinese car is sold in the U.S., it's only subjected to a 2.5 percent tax. “Also, no U.S. auto company is allowed to own even 50-percent of their own factory in China, but there are five 100-percent China-owned EV auto companies in the U.S.,” Musk said. On Wednesday, Donald Trump tweeted about supposed positive advancements in the negotiations between the U.S. and China, to which Musk questioned the possibility of overall trade equality between our two nations.
Plenty of other well-established automakers have managed to comply with China’s regulations, leading them to form one or more 50/50 joint ventures with local automakers. A few of the partnerships involves some companies that still sell obvious knockoffs of European and American vehicles. Tesla is however, one of the notable exceptions, choosing to pay the tariffs while also pressuring the government to allow foreign carmakers to establish their own factories in China. Twitter conversations aside, only time will reveal the automotive trade landscape between the two countries.