How the world might retaliate against Elon Musk
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As the world seeks ways to retaliate against U.S. tariffs, so-called "first buddy" Elon Musk appears to be high on the list of targets.
Why it matters: Targeted retaliation is designed to give supporters of Donald Trump an incentive to try to persuade him to deescalate any trade war.
- No Trump supporter is closer to the president than Musk.
Driving the news: China is slow-walking approval of Tesla's autonomous driving technology, the FT reported on Monday, with authorities seeking to use that approval "as a bargaining chip in trade negotiations with Trump."
- The White House, in response to state lawsuits, has said Musk has "no actual or formal authority" to make decisions himself.
The big picture: A key aspect of negotiating with Trump is being able to influence him directly.
- It helps explain why a Brookings Institution analysis found that Chinese retaliatory tariffs will affect more than twice as many workers in counties that voted for Trump in 2024 as workers in counties that voted for Kamala Harris.
- Similarly, when Trump announced 25% tariffs on all Canadian imports, the premier of British Columbia, David Eby, banned alcohol from red states in government-run BC Liquor Stores.
How it works: Canadian politicians like Eby have offered a playbook of sorts.
- Doug Ford, the premier of Ontario, said he's "ripping up the province's contract with Starlink," a unit of Musk-owned SpaceX, explaining that "Ontario won't do business with people hellbent on destroying our economy."
- Canadian politicians like New Democratic Party leader Jagmeet Singh and Liberal Party leadership candidate Chrystia Freeland called for a 100% tariff on Tesla imports.
Where it stands: Musk's businesses have substantial international exposure. The U.S. accounts for less than half of Tesla's total sales, which means foreign governments in general, and China in particular, have a significant amount of control over how many cars he can sell.
- SpaceX, too, has many foreign clients. Its rockets have launched satellites for countries like Australia, India, Turkey, Spain and South Korea, while Starlink's fastest growth is seen in countries like Nigeria and Kenya.
- X, Musk's social network, was found in breach of Europe's Digital Services Act, even as it faces multiple other complaints related to General Data Protection Regulation as well as election interference.
- Possible remedies, all of which will be handed down when U.S. relations with Europe are plumbing historic lows, range from massive fines to an outright ban.
- In Tesla's most recent list of risk factors in public filings, there's nothing about Musk's closeness to Trump, but there is a note that Musk's work at DOGE could end up meaning he spends less time running Tesla.
The bottom line: Musk's fortunes have until now seen a boost from his close association with Trump, although that already seems to be waning.
- If the rest of the world starts to think of his companies as being a proxy for Trump, and therefore worth attacking, the value of his Trumpiness might even turn negative.
- "Elon Musk's visionary leadership has been central to Tesla's rise," Saxo analyst Jacob Falkencrone wrote in a note this month, "but in 2025, his political and personal controversies are becoming a major investor concern."
