Why Elon Musk breaks with Donald Trump on prices

Donald Trump’s tariff assault seems to have finally led a gap between him and Elon Musk.

The richest person in the world was one of Trump’s largest cheerlers – but as far as prices were shook up with the world markets, Musk clearly said he was not a fan.

Tesla CEO spent the weekend subtly dissolving the president’s “reciprocal” prices and showing war with Peter Navarro, Trump’s best sales advisor.

Musk told a meeting of Italian politicians on Saturday, he hoped for a “zero-tail system” between Europe and the United States, and exchanged beards with Navarro.

The Washington Post reported that Musk had made a personal call to Trump during the weekend to reverse his radical price plan, without success. Musk did not immediately respond to a request for comments.

On Monday, when the world markets fell for a third consecutive day after the Trump administration doubled on reciprocal rates, Musk published a video of the legendary economist Milton Friedman touting the virtues of free trade.

Musk has been a long -standing opponent of the prices, even when they benefit his businesses.

Last year, the billionaire spoke out against the 100% price for President Joe Biden on Chinese manufacturers EV, who locked Tesla byd’s rival outside the United States.

“Tesla competes quite well on the market in China without prices and without defending support. In general, I am not in favor of any price,” said Musk at the time.

Tesla price

The prices that Trump has unveiled since his return to the office are much more threat to Tesla.

Although the manufacturer of electric vehicles is better positioned than its rivals to cope with the tax of 25% on imported vehicles which entered into force last week, the price will always increase the costs of the parties that Tesla imports in the United States.

About 25% of the components of the model are made outside the United States, according to regulatory documents, and Musk warned that the pricing impact on the company will be “significant”.

The series of “reciprocal” prices announced last week has less impact on Tesla – but the resulting market chaos added fuel to the fire of the alarming decline in Tesla shares.

The price manufacturer’s action has dropped more than 11% in the last five days in the middle of a wider market slide and is now down 38% this year. This drop helps to push the net value of musk less than $ 300 billion for the first time since November Monday.

Musk also has more reasons than most of whom are to worry about the consequences of the trade in brewing.

Like other American companies, Tesla relies on the world supply chain – but the company depends particularly on China, the second largest Tesla market and the site of a gigafactory.

Chinese risk

This makes Tesla a mature target if the Chinese government chooses to retaliate against American companies.

China and the United States exchanged new pricing threats on Monday, and the country’s Ministry of Commerce promised that China “was fighting until the end” in a statement on Tuesday.

Analysts have warned that climbing trade war with China could also encourage Chinese consumers to avoid Tesla in favor of local brands, in a patriotic trend similar to the “Buy Canadian” movement.

“The reaction of Trump’s pricing policies in China and the Musk association will be difficult to underestimate and this will encourage Chinese consumers more to buy servants such as Byd, Nio, Xpeg and others,” Wedbush and Tesla Bull Dan Ives’ analyst wrote in a Sunday note.

The increase in the brand’s toxicity in China would be a hammer blow for Tesla’s already precarious position in the country. The automaker is faced with intense competition from local rivals and has been late in the race to be the largest electric vehicle manufacturer in the world.

Sales plunging around the world and Tesla fighting against a “brand tornado” on Doge Cuts, a more pricing disturbance is the last thing Musk needs at the moment.