Tesla’s Elon Musk Tells Trump China Trade Rules ‘Make Things Very Difficult’

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Electric-car maker’s push comes as U.S. officials ask China to reduce trade deficit by $100 billion

Elon Musk noted on Twitter how U.S.-made cars imported into China face higher duties than Chinese vehicles coming to the U.S. PHOTO: PETER PARKS/AGENCE FRANCE-PRESSE/GETTY IMAGES

Tesla Inc. TSLA -0.59% Chief Executive Elon Musk took to Twitter on Thursday to lobby the president on China’s trade stance on auto makers, saying the Middle Kingdom’s current rules “make things very difficult.”

Mr. Musk’s comments on Twitter came in response to a tweet from President Donald Trump stating his administration has asked Beijing for a plan to cut the annual U.S. trade deficit with China. 

The Tesla CEO replied: “Do you think the US & China should have equal & fair rules for cars? Meaning, same import duties, ownership constraints & other factors.”

Mr. Musk’s comment suggests that he may be growing frustrated with the pace of opening a factory in Shanghai to meet the growing demand for Tesla’s electric cars among Chinese consumers. Tesla’s revenue in China roughly doubled last year to about $2 billion from $1 billion in 2016, ranking it behind the U.S. among Silicon Valley auto maker’s top revenue-producing countries.

Mr. Musk noted on Twitter how American-made cars imported into China face higher duties than Chinese vehicles coming to the U.S. and how foreign auto makers in China face restrictions on ownership of factories. To avoid 25% tariffs, foreign auto makers build cars in China through joint ventures with local manufacturers—something that requires a sharing of profit and potentially technology. It is an approach Mr. Musk has been trying to avoid.

“The current rules make things very difficult,” Mr. Musk wrote on Twitter. “It’s like competing in an Olympic race wearing lead shoes.”

On Thursday, while announcing his order to charge tariffs on steel and aluminum, Mr. Trump read off Mr. Musk’s tweet regarding the higher Chinese tariffs on American vehicles. “That’s from Elon,” the president said. “But everybody knows it, they’ve known it for years. They never did anything about it. It’s got to change.”

Tesla’s push into China comes as trade relations between the two nations has seen increasing tension. The Trump administration is asking Beijing for a plan to reduce the U.S.’s annual trade deficit with China by $100 billion, people familiar with the matter have told The Wall Street Journal.

Tesla is said to have forged a deal to set up in a special free-trade area in Shanghai without a local partner, but it hasn’t announced any such agreement. Some analysts are skeptical that Tesla could get a break on the tax. In November, Mr. Musk gave a rough three-year time frame to begin manufacturing in China. 

He has said a China factory with a capacity of at least 200,000 vehicles a year would build Model 3 sedans and the coming Model Y sport-utility vehicle.

As Mr. Musk looks to expand in China, several Chinese-backed startup auto makers have opened operations in the U.S. with ambitious plans heavily inspired by Tesla’s success.