Elon Musk is a man who President Donald Trump says is a person “who’s using our wonderful space facilities and did a great job.” Elon is also an American citizen, and did his patriotic duty by tweeting at the President. Trump then read those tweets aloud at a press conference. But, because this is Trump we’re talking about, our president cherry-picked a bit and took out the context.
“A tweet just came in from Elon Musk,” he began. And then he read one of Musk’s tweets:
“That’s from Elon, but everybody knows it, they’ve known it for years they never did anything about it,” Trump added. Trump went on to say that the U.S. would be introducing a “reciprocal tax program at some point” to rectify this perceived issue:
So that if China’s going to charge us 25 percent or if India’s going to charge us 75 percent, and we charge them nothing, if they’re at 50, or they’re at 75, or they’re at 25, we’re gonna be at those same numbers, it’s called reciprocal, it’s a mirror tax, so they charge us 50 we charge them 50, right now they’ll charge us 50 we’ll charge them nothing, it doesn’t work. So that’s called a reciprocal tax, or mirror tax, and we’re going to be doing a lot of that.
Let’s break this down. As it is now, this is barely even an issue. There are still very few Chinese-built cars in the U.S.—a couple Buicks, Volvos and Cadillacs, that’s it.
Automotive tariffs haven’t really been a huge priority for the past couple of decades mostly because the Chinese automotive market was incredibly tiny compared to giants such as North America and Europe, and China didn’t really build any cars for the American market.
So if some tariffs here or there got forgotten about by regulators, it was almost understandable. There were much more pressing industry and regulatory issues.
But now the Chinese car market is huge, and everyone’s trying to get in. And more than that, Chinese car companies are just starting to eye the American market now.
Elon didn’t simply fire off a singular tweet, as well. It came in a thread about automotive regulations in general, and how a lack of international standardization can hurt everyone:
And as much as we love to just yell at Elon day about all sorts of things serious and ridiculous, our man Musk is right here. We’ve noted since forever that a lack of standardized international automotive regulations and the resulting dumb taxes and bizarre workarounds only hurt American consumers. It’s not just the tariffs, though those don’t exactly help. It’s often rules about safety and emissions which entirely throw automakers for a loop, not because the safety and emissions regulations are too difficult to meet, but rather because they’re just different.
It’s not enough that cars built for the American market, or the European market, or the various Asian markets, are safe, because they’re forced to go about achieving that level of safety in different ways. Which leads to massive costs which function as an often-insurmountable barrier to production, and when they are surmounted, those costs get passed on to consumers.
But as we’ve pointed out before, it’s probably going to be a hell of a long time before the systems are standardized and fixed. The first problem is that the bizarre trade rules were spurred by the car companies themselves as a protectionist measure, as we noted in 2014:
The fact is that this has never been about safety or emissions. The law is about protecting car companies and their dealers. At one point, so-called “grey imports” were eating heavily into automakers’ domestic profits, luxury brands in particular. Why buy what’s on the BMW showroom floor in America when you can import a German-spec car not offered here with a bigger engine and more power? Grey imports accounted for thousands of cars on the road at one point.
Led by Mercedes-Benz in 1988, these automakers spent millions of dollars lobbying Congress to pass the Imported Vehicle Safety Compliance Act. This led us down the path of the restrictive anti-import laws we have today, including the ban on cars made in the last 25 years.
And the second, as NPR’s Planet Money pointed out a few years back, is that there are now national pride issues at stake. Would you, a proud, patriotic flag-waving American, willingly give up the rules governing your Ford F-150 King Ranch Edition to a commission of FOREIGN BUREAUCRATS (and also probably some American bureaucrats) who just don’t understand what it means to drive a car in the greatest best country on Earth?
Probably not, even if it does help American factory workers and consumers.
The part about China not allowing any Chinese companies to more than 50 percent owned by foreign citizens is pretty annoying, though.
Anyway, the rest of the press conference went pretty well: