Elon Musk does a U-turn and criticises US tariffs on Chinese EVs

Analyst says Tesla boss trying to limit retaliatory action for US companies in China, with carmakers ‘petrified’ of being shut out of Chinese market

Elon Musk has criticised US government tariffs on Chinese electric vehicles (EVs), describing the levies as “not good” and a distortion of the car market.

The Tesla chief executive had previously supported trade barriers but he performed a U-turn on Thursday during a video appearance at a Paris tech conference.

“Neither Tesla nor I asked for these tariffs; in fact, I was surprised when they were announced. Things that inhibit freedom of exchange or distort the market are not good,” Mr Musk said at Viva Technology via video link.

US president Joe Biden this month introduced new tariffs – a tax charged on foreign imports – on an array of Chinese goods, including EVs, in an effort to support US manufacturing. The White House has maintained a number of tariffs introduced during Donald Trump’s presidency, while ratcheting up others, including quadrupling EV duties to more than 100 per cent. The new measures affect $18 billion (€16.6 billion) in imported Chinese goods, according to officials.


In January, Mr Musk said trade barriers were needed or China would “demolish most other car companies in the world”. Tesla’s financial performance has been affected by competition from Chinese manufacturers, including downward pressure on prices. Last month, Tesla reclaimed the title of the world’s largest EV manufacturer from its Chinese rival BYD, based on first-quarter car sales.

Speaking at the Viva conference, Mr Musk rowed back on his January comments. He said Tesla competed “quite well” in the key Chinese market without tariffs. This week, a Chinese trade group said Beijing was considering retaliatory tariffs, albeit on petrol-powered cars.

“Tesla competes quite well in the market in China with no tariffs and no deferential support. I’m in favour of no tariffs,” Mr Musk said.

Marina Alekseenkova, a director at Hypothesis Research, said the US tariffs supported domestic producers but could “slow down the overall growth trend of the EV market”.

Matthias Schmidt, an automotive industry analyst, said: “Musk is attempting a damage limitation strategy to limit any retaliatory action for US companies in China on the back of the US tariff hike. The same can be said for German companies openly calling for no rise in Chinese tariffs across the EU or some even calling for tariffs to be cut. They are petrified of being shut out of the world’s largest passenger car market, China.”