The Tesla chief says that will be the outcome if trade barriers aren't imposed.
His comments come as firms like BYD make inroads into global markets.
The Chinese brand overtook Tesla as the biggest maker of electric vehicles in the final quarter of last year.
It undercuts overseas rivals on prices, and offers a wider range than many.
Musk says Chinese firms like it are now the "most competitive", and he predicts they will have major success worldwide.
Last year, Tesla began cutting prices in a bid to fight back.
Musk says his company will also start production of a new model next year - with Reuters sources saying it will be cheaper than current cars.
His latest comments come after Tesla reported slowing sales growth and adjusted earnings that fell short of analyst forecasts.
But his call for tariffs could fall on receptive ears.
The EU is already weighing up whether to protect its car firms from Chinese rivals that Brussels says benefit from state aid.
Meanwhile, U.S. President Joe Biden has said he won't allow China to dominate the industry.
And his expected rival in this year's presidential election, Donald Trump, has said he would increase tariffs on all imports.
