Clash over India deal shows why a Trump-Musk fallout is inevitable

medium118574300Elon Musk’s companies may finally have cracked open the Indian market, though the reaction from US President Donald Trump shows the coalition he’s constructed is more fragile than it appears.It wasn’t obvious to anyone whether Musk met Prime Minister Narendra Modi on his recent trip to Washington as a businessman or as a representative of the US government. In fact, when Trump was asked that exact question, he seemed unsure of the answer.Perhaps the correct comeback would have been “both”. Indians certainly seem to know how to handle this apparent contradiction. A few days later, Bloomberg News reported that Tesla was hiring in India, and that plans had been drawn up to ship a few thousand of its cars to the country. The newly empowered Musk seems to have finally gotten the market access he craves.Tesla has long wanted to sell cars in India, but Musk has baulked at the high tariffs that would be applicable on imported high-end EVs. The government, meanwhile, would far prefer that Musk manufacture them locally. Any agreement would involve them meeting in the middle: Last year, New Delhi said that any company investing $500mn in domestic manufacturing would be able to access lower tariffs on imports.But here’s the problem: Trump wants all tariffs lowered. He has often said that Indian import levies make it impossible for American cars to compete. Nor does he look kindly on US companies that want to invest abroad under such circumstances. In fact, when specifically asked if Musk should build a factory in India to get around its tariff walls, Trump said that would be “very unfair”.When concerns are raised about Musk having a conflict of interest as a government official, the interests in question are usually those of Musk’s companies and the American public. But the conflict that is most likely to hurt Musk is when his business requirements clash with Trump’s other priorities. medium nocaptionhttp://youtu.be/HpkfyEqSLd4?si=oHLENT4AwUf349VTInvesting in India is an excellent example of such a divergence. Companies like SpaceX and Tesla have long eyed the local market, and will be willing to put money into the country if it means that they can get around high regulatory or tariff barriers. But Trump wants that capital to stay in the US.Perhaps Trump and Musk can work it out. But the problem is larger than this captivating bromance. It gets to the heart of whether two large wings of the Trump coalition — Big Tech and the America Firsters — can stay together for four years.There have already been signs of tension between these two, again involving India. Many hardline Trump supporters were dismayed when the president’s champions in Silicon Valley spoke up in favour of H1-B visas, the majority of which go to engineers of Indian origin. Musk himself felt strongly about the issue, saying that “the reason I’m in America along with so many critical people who built SpaceX, Tesla and hundreds of other companies that made America strong is because of H1-B”.Trump seemed to come down on the tech bros’ side of the skilled-worker visa debate, saying that “we have to have the most competent people in our country”. But that may not be the outcome every time. Certainly, on each occasion when there’s such a disagreement, the coalition will fray further.For Big Tech, India is a vital resource. It’s a big, rapidly digitalising market where a lot of money could be made. And it is also a useful source of ideas, startups and skilled engineers. And even if the Modi-led government refuses to open up its economy further, tech companies can deal with any barriers easily enough by investing and hiring locally. But that is unlikely to please the other part of the Trump coalition, which will see it as dangerously globalist.Trump rode to power promising that his business acumen would force everyone to make better deals with the US. But what happens when some of his followers, like Musk, want to make their own deals with the world?