Will 'First Buddy' Musk Shield Trump’s Blade Aimed at China?

[MuskeuXTrump]④ Muskeu, a New Kissinger in US-China Relations?

Can Elon Musk, Tesla CEO and Donald Trump's 'first buddy,' play the role of a 'second Kissinger' who can block the U.S. blade aimed at China for America First policy?

Musk Standing Between the Blade Directed at China

Trump's actions toward China after taking office are predictable. Calling himself the 'Tariff Man,' Trump has announced plans to impose a 60% tariff on all Chinese imports to reduce the massive U.S. trade deficit. Having already initiated a 'trade war' during his first term by imposing high tariffs on thousands of Chinese products, he is expected to kick off 'America First' and protectionism policies from day one.

For China, which has become more export-dependent due to sluggish domestic demand, the tariff bomb is an inevitable blow. China is currently experiencing weakened economic momentum due to a real estate downturn and debt crises in banks and local governments. Larry Hu, Chief China Economist at Macquarie Group, predicts that additional U.S. tariffs will reduce China's annual exports by 8% and lower its economic growth rate by 2 percentage points.

Of course, there is also speculation that China will withstand better than during Trump's first term. When U.S. export routes were cut off in the past, China developed alternative export markets in Southeast Asia and Latin America and has now emerged as a dominant supplier in the clean energy sector. When the U.S. imposed advanced semiconductor regulations, China pushed for self-sufficiency in technology and has achieved results.

Musk at a Crossroads: Business or Power?

The problem is that if Trump follows through on his tariff bomb and engages in a stronger trade war with China, Musk's position will also become difficult. Tesla's largest overseas factory is in Shanghai, China. As Tesla's first overseas factory, the Shanghai Gigafactory began operations in 2019 with full support from the Chinese government from the early construction phase. The originally planned two-year construction period was completed in just one year, as if it had a 'regulatory free pass.' It also received low-interest loans worth 11 billion yuan (about 2 trillion won) from local state-owned banks.

Tesla is also the first and only foreign car company to own a factory exclusively on the Chinese mainland. This contrasts with most foreign automakers like Volkswagen and General Motors, which operate joint ventures with local Chinese partners. The Tesla Shanghai factory, which sources 95% of its production parts locally, recently surpassed a cumulative production volume of 3 million units. China, which Trump has warned will face 'bomb tariffs,' is Musk's largest customer, accounting for more than 20% of Tesla's total sales. If U.S.-China relations deteriorate further, Musk's impact will be inevitable.

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Cooperation with China is also essential for Musk's life-or-death autonomous driving business. Tesla received testing approval in Shanghai last June and is proceeding with procedures to launch cars equipped with a Full Self-Driving (FSD) system. Since Chinese domestic electric vehicle companies are accelerating autonomous driving technology development to compete with Tesla, if the Trump administration's second term confronts China, Tesla's FSD car launch in China could become uncertain. This means Musk, favored by Trump, may face a moment of choice to confront the 'Trump-style tariff barrier' to preserve his China business.

Musk is not the only one paying close attention to maintaining relations with China. His mother, Maye Musk (76), published a memoir in 2020 titled A Woman Makes a Plan, whose Chinese edition is a bestseller in China. Maye Musk enjoys strong support from middle-class women in major Chinese cities like Beijing and also serves as a promotional ambassador for Tesla.

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Is Musk a Modern-Day Kissinger?

China is hopeful that Musk, whose interests are intricately intertwined, will play the role of a 'second Kissinger' in the next administration. Former U.S. Secretary of State Henry Kissinger was a 'diplomatic giant' during the Nixon and Ford administrations, visiting China over 100 times and facilitating summit meetings between the two countries' leaders, playing a key role in improving the sharply confrontational U.S.-China relations during the Cold War era.

Musk made a surprise visit to China last April and met with Premier Li Qiang. Earlier this year, when the Biden administration raised tariffs on Chinese electric vehicles to 100%, Musk voiced concerns about escalating U.S.-China tensions.

Scott Kennedy, Senior Fellow for China Business and Economics at the Center for Strategic and International Studies (CSIS), said, "In just a few months, expectations have grown that Musk could become a second Kissinger mediating exchanges between Washington and Beijing." Wang Yiwei, Director of the Institute of International Relations at Renmin University of China, also said, "Musk is a businessman who understands both China and the U.S.," expressing hope that he could help cancel or ease the bomb tariffs announced by Trump. CNBC noted, "Expectations that Musk could fill the void left by Kissinger have arisen as he has more frequent contact with senior Chinese officials."

Wang Huiyao, founder of the Beijing-based think tank Center for China and Globalization (CCG), mentioned, "Distinguished business leaders like Musk, Tim Cook (Apple CEO), and Stephen Schwarzman (Blackstone CEO) could join forces to act as a 'Kissinger Group.'"