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From Allies to Adversaries

Once aligned, Elon Musk and Donald Trump have become political foes. Musk previously served as a top advisor to Trump’s Department of Government Efficiency (DOGE), advocating for deregulation and government simplification. Trump publicly praised Musk’s contributions, calling it a “big win for efficiency.”

However, tensions surfaced in June 2025 when Musk criticized Trump’s large-spending tax cut bill, calling it a “disgusting abomination” that increased the deficit. The bill also reduced electric vehicle tax credits, directly impacting Tesla’s profitability.

Trump Responds and Threatens

In the Oval Office, Trump expressed disappointment with Musk, suggesting he was “wearing thin,” and expelled him from the room. On social media platform X, Trump threatened to cancel Musk’s government contracts, including SpaceX and Starlink, potentially costing tens of billions of dollars and triggering a stock decline.

Market Fallout and Rising Hostility

Trump’s criticisms caused Tesla shares to plunge over 14%, erasing around $150 billion in market value and nearly $20 billion from Musk’s net worth. The attacks unsettled investors and dampened Tesla’s short-term prospects.

Trump previously praised Musk’s support, claiming “Without me, Trump would’ve lost the election.” But as reforms under DOGE faltered, the relationship soured, with Trump now branding Musk as “hostile” and criticizing his loyalty.

Political and Financial Implications

Analysts warn that Musk’s recent stance alarms Republican lawmakers wary of alienating him or Trump, both powerful figures. Some suggest investigations into Musk’s security clearances, immigration, and China ties. Musk’s independence and willingness to oppose former allies make him unpredictable in Washington.

What’s Next? Escalation or Truce?

Trump continues to press Musk on government contracts, even hinting at nationalization, signaling potential escalation. Meanwhile, Musk remains defiant, provoking further backlash with public provocations.

With politicians on both sides preparing for potential conflicts, tensions threaten to destabilize markets and the future of Musk’s enterprises. The rivalry has transformed from joint ambitions to an unpredictable power struggle, placing Tesla, SpaceX, and Musk’s media platform X in a precarious position.

Key Takeaways

1. Trump weaponized spending: Federal contracts and subsidies are now tools for political leverage.
2. Musk’s independence: His recent defiance signals a shift from mutual reliance to autonomous power.

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