Elon Musk vs. Trump? Tesla and SpaceX complain about duties

Two companies led by Elon Musk — SpaceX and Tesla — have submitted letters to U.S. Trade Representative Jamison Greer. The main purpose of the letters is to lobby the U.S. Trade Representative regarding the tariff policy of the administration of U.S. President Donald Trump.

It is worth noting that since Trump came to power, significant changes have taken place in US economic policy. Trump has been imposing (and sometimes postponing or canceling) tough tariffs on China, Mexico, Canada, and Europe, and other countries have been responding with their own tariffs. At the same time, Elon Musk is leading the so-called Office of Government Efficiency, an initiative to reduce government spending and the number of employees on behalf of President Donald Trump. Sometimes this leads to blocking the work of certain areas.

Against the backdrop of these events, SpaceX and Tesla addressed the US Trade Representative with different messages.

Tesla

Electric car manufacturer Tesla has warned of the negative impact of tariffs and duties that other countries may impose in response to the US. Such measures could have a significant impact on the company’s financial results.

In its unsigned letter, Tesla urged Greer to «take into account the secondary effects» of some of the proposals to combat unfair trade.

«Tesla recognizes and supports the importance of fair trade, but the assessment of potential actions by the USTR (U.S. Trade Representative) to correct unfair trade practices should also take into account exports from the United States», — the letter submitted by Miriam Ikeb, Deputy General Counsel of Tesla, reads.

Tesla’s letter warned the Trump administration that duties on goods from other countries could lead to retaliatory duties on their part and increase the company’s production costs. Tesla explained that the high costs are due to the fact that it has to import certain components for its cars.

«U.S. exporters are disproportionately affected when other countries retaliate against U.S. trade actions», — the letter states.

Tesla emphasized:

«Previous US special tariff measures:

increased Tesla’s costs for car production in the United States,
increased the cost of exporting these cars, which led to less competitiveness of American manufacturers in the international market».

Tesla warns that even with aggressive localization of the supply chain (import substitution) «some parts and components are difficult or impossible to obtain within the United States».

Therefore, the USTR should consider ways to avoid these problems in the future, the company concluded in the letter.

SpaceX

It is worth noting that SpaceX, which hardly uses imports to provide its services, has taken the opposite position.

SpaceX, for its part, complains that trade barriers abroad increase the operating costs of its Starlink satellite Internet service, while foreign competitors do not face similar costs in the United States.

In its letter, SpaceX stated that it «faces a number of regulatory complexities and trade barriers in each country» and that the US government must address these issues to support «continued US leadership in space».

The letter notes that the company is forced to pay foreign governments for spectrum access, pay import duties for Starlink equipment, and cover other fees that «artificially increase the cost of operations in these countries».

«The duties paid in just a few countries significantly increase the cost of Starlink products in those countries, even though the U.S. does not actually impose similar duties on imported foreign products for consumers here», — wrote Mat Dunn, SpaceX’s senior director of global business and government affairs.

«As President Trump has pointed out in the context of other industries, this creates significant competitive difficulties for American companies,» Dunn added.

The letters from Tesla and SpaceX are only two of more than 700 received by the Trade Representative in response to an invitation to comment on «unfair trade practices of other countries».

The trade association Autos Drive America, which represents the interests of major foreign automakers including Toyota, Volkswagen, BMW, Honda, and Hyundai, warned in a separate letter that the introduction of «broad-based tariffs» could disrupt production at American auto plants.

It is worth noting that Europe has recently been actively considering alternatives to SpaceX’s satellite Internet. For example, Eutelsat may replace Starlink for Ukraine. In general, 4 EU companies compete for the right to replace Starlink in Ukraine.

Source: reuters, wccftech, cnbc