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Elon Musk and Donald Trump’s once-aligned interests may soon clash as growing trade tensions with China threaten Tesla’s operations. According to Steve Brazier, CEO of analyst firm Canalys, Musk’s deep reliance on China for Tesla’s supply chain could put him in direct conflict with Trump’s proposed 60% tariff on Chinese imports.
With Tesla’s Shanghai Gigafactory and battery supply chain at risk, analysts predict a fallout between Musk and Trump by the end of 2025. As the U.S.-China trade war intensifies and Taiwan’s semiconductor dominance remains a flashpoint, Musk may be forced to choose between political loyalty and business survival.
Musk’s business empire, particularly Tesla, remains heavily dependent on China for both production and materials. The Shanghai Gigafactory, Tesla’s largest manufacturing facility, operates under unique privileges granted by Beijing, including the ability to function without a local joint venture partner. Additionally, China supplies Tesla with essential batteries and raw materials, making it critical to the automaker’s supply chain.
Trump’s promise to impose 60% tariffs on Chinese imports poses a direct challenge to Tesla’s ability to operate efficiently. “Tesla needs batteries from China, or it cannot operate,” Brazier stated. The proposed trade war, combined with the possibility of escalating tensions between the US and China, could put Musk’s companies in a precarious position.
Tesla’s push to expand its full self-driving (FSD) technology also faces potential roadblocks. To maintain competitiveness in the Chinese market, Tesla must comply with China’s stringent data-sharing laws while also reassuring US regulators that such agreements do not pose security risks.
“Tesla needs to offer full self-driving, or they’ll fall behind the innovation of the Chinese industry,” Brazier noted. However, navigating cross-border regulations may prove difficult under Trump’s administration, which has demonstrated a willingness to challenge China at every turn.
Beyond trade tensions, Taiwan remains a critical flashpoint. China has long expressed its intention to reunify with Taiwan, while Trump has signalled reluctance to fund the island’s defence. The global tech industry, including Tesla, relies on Taiwan’s semiconductor production, with 90% of chips manufactured there, primarily by TSMC.
“Tesla can’t function without Taiwan,” Brazier emphasized. Any disruption in Taiwan’s chip supply could have severe consequences for Tesla and other major tech firms. China, rather than launching a direct attack, could target undersea cables to disrupt communications—a move it has been suspected of attempting in the Baltic Sea.
Despite their shared interest for limited government interference in their way of working, Musk-Trump relations appear unsustainable. Moreover, Tesla has benefited hugely from US subsidies, while SpaceX has received lucrative federal contracts. Their ability to align on conflicting visions of economic and geopolitical policies seems to be uncertain .
Brazier believes that once initial regulatory negotiations are settled, tensions will escalate. “Musk and Trump will no longer be friends by the end of 2025,” he predicted. “Give them a year to get some regulations sorted for his [Musk’s] companies, and they will fall out.”
With the rising geopolitical and economic tensions, Musk is likely to part ways with Trump, which will consequently affect Tesla and the overall technology sector.
