Aerial view of Tesla Shanghai Gigafactory on March 29, 2021 in Shanghai, China. (Photo by Xiaolu Chu/Getty Images)
President Donald Trump’s posture on China has undergone a significant shift since his inauguration. In February 2024, Trump suggested imposing 60% tariffs on Chinese goods, but now he is considering much lower tariffs, possibly as low as 10%. The change in policy is a significant boon to Elon Musk, the primary source of whose wealth is Tesla, which relies heavily on Chinese government cooperation.
Musk’s business operations in China include his largest factory, located in Shanghai, which produces one million cars per year. The majority of these cars are sold in China, a key market as sales stall in Europe and the US. Musk has secured special privileges from the Chinese government, including a discounted corporate tax rate and loans from state-owned banks.
Trump’s new stance on China is in line with Musk’s preference for no tariffs. “In general, I am in favor of no tariffs,” Musk said last year. The change in policy is seen by market analysts as a “softer approach” towards China, with Trump saying he looks forward to “doing very well with China and getting along with China.”
Musk has also secured privileges from the Chinese government to operate his businesses in the country. He met with Chinese Premier Li Qiang before breaking ground on a $200 million battery plant in Shanghai. Li praised Tesla as a “successful model” of foreign investment in China.
In return, Musk has praised the Chinese government, saying they “really actually seem to care a lot about the well-being of the people.” Musk has also consulted with Chinese leaders, including Chinese Premier Li Qiang, about managing the situation regarding TikTok, a Chinese company that is under scrutiny by the US government.
Trump has downplayed any national security concerns related to TikTok, saying that it is not a priority to ban the company. He has also suggested that Musk purchase TikTok to resolve the issue, but according to a report, Oracle is the lead US investor in the company.
Musk’s support for the Chinese government has raised eyebrows, with some critics questioning his motives. In a recent speech, Musk urged attendees of a far-right rally in Germany to “move on” from “past guilt,” which was widely interpreted as a reference to the Holocaust.
