As Donald Trump prepares to return to the White House next month, businesses worldwide are bracing for a worsening US-China trade war.
While electric vehicle (EV) makers were impacted by trade disputes during Trump's first term, Tesla — and owner Elon Musk — could potentially benefit this time.
Kyle Chan, a postdoctoral researcher in Chinese industrial policy at Princeton University, told the ABC's Asia News Week that Mr Musk was "uniquely positioned" to mediate between the two superpowers.
However, questions remain about how long the Trump-Musk bromance can last and whether the billionaire's strong links to both countries could see the kingmaker end up becoming a "pawn".
'First buddy' to Trump and Li
Following Trump's victory, Mr Musk, who reportedly donated hundreds of millions to the Republicans, has become a key confidant of the president-elect.
He's been involved in everything from Trump's phone call with Ukrainian President Volodymyr Zelenskyy, to suggesting future cabinet picks.
Meanwhile, he enjoys a friendly relationship with China, particularly Premier Li Qiang.
Dr Chan says Mr Musk "often touts his close relationship" with top officials.
While Mr Musk jokes about being Trump's "first buddy", car industry analyst Lei Xing said the billionaire could also be considered "pro-China".
"He's the 'first buddy' to Donald Trump, and he's also maybe the 'first buddy' to Li Qiang," he told the ABC.
"Expect Elon to straddle both sides, and both men, and get what he wants."
China is Tesla's biggest market outside the US, with sales comparable to those in America, and the car maker has enjoyed favourable treatment in the country not afforded to other foreign businesses.
In particular, Shanghai is pivotal to the company's success, with half of its global shipments coming out of the port city.
"You cannot overstate the significance of Shanghai to Tesla," Mr Xing emphasised.
"Without Shanghai, there's no Tesla today."
Trade war set to impact EVs
EVs, along with lithium batteries and solar panels, are the "New Three" that Chinese President Xi Jinping believes will be the major drivers of the country's growth.
Government subsidies worth billions have been invested in China's supply chains to boost manufacturing capacity, including for a significant export market.
Other nations have expressed concern that China's subsidies give its car makers an unfair advantage and are harming their own domestic industries.
In May, the Biden administration imposed a 100 per cent tariff — a tax paid by importers — on Chinese EVs, and the EU followed with tariffs up to 45 per cent.
Dr Chan said the EV tariffs were worth watching closely over the next few years as the industry lay at the intersection of two key issues.
"It's economically significant and you have a lot of jobs tied to that," he said.
He said the second issue was the contest between the two superpowers on tech advances.
"If EVs are really going to be the future … is that something that the US is willing to let China dominate?" he asked.
Tesla could benefit from Trump policies
In late November, Trump announced he would impose at least a 10 per cent tariff on all goods coming from China.
But even if the trade war worsens, Mr Musk is in a position to influence policy and push for carve-outs to lower import costs of his businesses' China-made parts.
As revealed in a new research paper, politically connected companies were more likely to receive exemptions from China-related tariffs during Mr Trump's first term.
Dr Chan predicted Mr Musk could "facilitate communication between the Chinese and the American sides" and "find areas of overlap or compromise" between the two countries.
Trump has also promised to eliminate a $US7,500 ($11,600) EV tax credit — an idea for which Mr Musk has expressed support.
Mr Xing said in the short term, that would bad for Mr Musk's company but in the long term, it could be positive.
"It will make it more difficult for Tesla's competitors, especially in the US market, to really dent Tesla's market share," the EV analyst said.
In pole position to influence regulations
Trump's return to power comes as Tesla's competitors are chipping away at its global EV dominance.
Mr Musk is betting the future of his company on autonomous driving technology, which Tesla brands Full Self-Driving (FSD), which is yet to receive full regulatory approval in the US.
But some appear to believe his position in the Trump administration could help him influence regulations directly.
Tesla stock surged amid reports Trump's transition team were seeking to develop rules for self-driving cars.
While Tesla is a leader in autonomous driving in North America, it faces much stiffer competition in China and a lack of regulatory approval there as well.
However, Mr Xing said he expected Mr Musk to go to China and get permission soon, saying it was "only a matter of time".
Dr Chan, though, said approval remained "an open question".
"One might wonder whether this could be a bargaining point or a leverage point later on in negotiations that involve tariffs and the broader trade war," the expert said.
Will the Trump bromance last?
In the past, Elon Musk has been somewhat of a political chameleon, shifting his support and stances.
He was previously more aligned with, and voted for, the Democrats.
The billionaire sat on White House advisory councils during Trump's first administration but left after the US withdrew from the Paris climate accord.
In 2022, Trump called him a "bullshit artist" while Mr Musk told the former president to "sail into the sunset".
In a post on his Truth Social platform, Trump derided Mr Musk's businesses as "electric cars that don't drive long enough, driverless cars that crash, or rocketships to nowhere".
They later reconciled but the two men could again clash on issues like climate change or "big tech".
Mr Musk has a history of challenging authorities — particularly in Western nations. He has referred to himself as the "Chief Troll Officer" of X.
"With his persona and Trump's persona, I'm not sure whether this [close relationship] will continue to last for the full four years," Mr Xing said.
"In the short term, it looks like that they're both using each other as pawns — the DOGE [Department of Government Efficiency], and Tesla using [Trump] fast-tracking some of what [Musk] wants, including 'robotaxis', or regulatory policies.
"It's a delicate balance, with two men having so much ego."
For now, China seems comfortable with Mr Musk's proximity to president-elect Trump.
In an editorial, state media offered lavish praise for the so-called "Tesla effect" as a testament to China's openness for business, while days later they dismissed Trump's 10 per cent tariff proposal as "nonsense".
However, Tesla's geopolitical situation was not going to remain comfortable indefinitely, according to Dr Chan.
"There is the possibility that as a kind of retaliation — or as a way to exercise pressure over the US side — Tesla could become potentially a pawn in the broader trade dispute," he said.
Watch the full episode of Asia News Week on ABC iview or YouTube.
