Donald Trump won the US presidential election…and so did Elon Musk. The famous founder and CEO of Tesla, the flagship manufacturer of electric cars in the United States, has been an obvious protagonist of the election campaign with his continued and effusive displays of support for Trump. In a sort of idyll which began by proposing to the Republican candidate to return generous donations with unusual bursts of enthusiasm at a rally, much to Trump’s astonishment. How much of this effort will pay off now remains to be seen, but some analysis suggests that Musk may become the man who “whispers” to Trump in the Oval Office.
Although Musk has repeatedly boasted of having an independent outlook and even supporting Democrats in the past, his approach to Trump has been with great intensity and speed, one might say. As a contribution to the idyll, Musk contributed over 130 million of dollars, according to Bloombergto Trump’s cause through a super PAC (political action committee). He also made available a support mechanism in X run by himself with endless support messages.
One of them, published in recent hours, with an electoral result already well established, proved particularly revealing. It’s a job with a photo of a rocket taking off (space is another pillar of the “Da Vinci of the 21st century”, as it is now called) accompanied by the sentence: “The future is going to be fantastic”. Beyond the excitement over the victory, this future message reveals that an ever-agitated Musk has big plans and the question is how far Trump will let him go or how far he will pay special attention to him. For now, in a decision as important as that of naming the vice-president in the electoral “list”, Musk would have influenced Trump so that the chosen one would be JD Vance.
But after the electoral victory, the ball is in the court of the former president and the new president. Amid the euphoria of an election campaign, Musk and Trump publicly discussed the possibility of the billionaire CEO joining a possible Trump administration. “czar” of government efficiency and deregulation (“cost reduction secretary” they came to verbalize). Although with Trump’s return to the White House a promise of this type may be somewhat dissipated, analysts agree that with the Republican nominee for the Oval Office there are some policy areas in which Musk will attempt to influence Trump to benefit his own business interestsallowing these pressures to have a national and global echo.
Confidence in this hypothesis was clearly manifested in Tesla Stock. The titles have been achieved shoot more than 14% in the negotiations prior to the opening of Wall Street, in anticipation that the brand will benefit from this proximity of Musk with the new administration. “The most positive thing in a Trump victory will be for Tesla and Musk,” writes Daniel Ives, an analyst at Wedbush Securities, in a report on what a Republican victory would mean for technology companies. Tesla would have a competitive advantage over other manufacturers if the United States reduced tax incentives for electric vehicles, the strategist predicts.
China, customs tariffs and subsidies
But the first point towards which all these eyes turn is necessarily China. In a note to clients, the Capital Economics team led by its North American chief economist, Paul Ashworth, notes that since Tesla’s Shanghai Gigafactory represents about 40% of its global vehicle production capacity, Musk has interest in avoiding a complete breakdown in relations between the United States and China.
“It is true that Tesla does not import any of its Chinese-made electric vehicles into the United States. But Musk would rightly fear a backlash from the Chinese government if Trump followed through on his threat to impose tariffs of up to 60% on Chinese products,” explain the analysts. The CEO of Tesla assured last Monday in a podcast that he is not in favor of the simultaneous application of high customs duties, but that he prefers “measured and specific” levies.
Musk would also have a vested interest in preventing the new Trump administration from removing the subsidies for electric vehicles provided for in the Inflation Reduction Act signed by Joe Biden. And, more generally, Capital Economics emphasizes that, given its commercial interests also in the solar energy and batteriesMusk is reportedly trying to stop Trump from adopting a strongly anti-environmental energy policy.
Conflict of interest
In the hypothetical event that Trump ultimately agrees to have Musk join the administration to lead a government efficiency campaign, and as long as Musk is willing to devote his time to it (there’s Tesla, there’s SpaceX, there’s X, there is Neuralink) – Trump insisted that Musk “He’s dying to do it.”-, the consequences seem more diffuse.
If he somehow became part of the government, Musk would have the power to recalibrate federal laws to put them in favor of the activities of its companies with several contracts in progress with the American administration, such as Tesla and SpaceX. Furthermore, their presence within the Administration would raise suspicions regarding the 20 investigations opened for possible illegalities in the operations of these two companies, according to information from The New York Times.
Likewise, as stated in the magazine information rolling stone collected by Europe PressMusk could benefit from a tax exemption “worth tens of billions of dollars” over the next four years, depending on the outcome of Trump’s income and billionaire tax cuts announced in recent months.
Specifically, the exemption would be granted by current regulations promulgated by the U.S. Office of Government Ethics that prohibit a government employee from participating “personally and substantially” in private matters in which he or she has a “financial interest” and has the ability to force him to participate. to “sell the companies’ holdings”. Therefore, and by applying a provision of the tax code inserted 35 years ago, public officials can indefinitely save all capital gains taxes on such divestment, a potential profit for Musk of “billions of tens of millions” of dollars”, add the information collected by PE.
“Purge” of civil servants
Those resulting from this entry into the Administration would also have political significance. “A government efficiency campaign led by Musk could merge with a new attempt by Trump to politicize more government jobs. In October 2020, Trump issued an executive order creating a new employment category (the List F), removing protections for up to 50,000 federal workers, who may have been fired if perceived as disloyal. Biden reversed that decision upon taking office, but Trump promised to restore order on day one, as part of his plan to end what he calls the deep state. Ashworth and his team. Deep State These would be what we call in Spain the “state sewers”.
Even if the macroeconomic repercussions of such a government efficiency campaign could prove to be quite limited, the analysis house emphasizes that a sharp reduction in personnel, combined with a politicization of public jobs, even at low level, could question the quality of public statistics prepared by the Bureau of Economic Analysis (BEA), Bureau of Labor Statistics (BLS), Census Bureau, and other agencies. In an extreme case, they warn, markets could shift their attention away from official government reports and focus more on alternative measures developed by the private sector, which would represent a major shift on Wall Street.
