Elon Musk warns Donald Trump's tariffs could trigger recession by late 2025
Tesla CEO Elon Musk has issued a strong warning that US President Donald Trump's proposed aggressive tariffs could push the country into a recession by late 2025.
In a post on X, Musk stated, 'The Trump tariffs will cause a recession,' signalling a dramatic shift from his earlier support for Trump.
The hostilities began when Trump criticised Tesla CEO Musk in the Oval Office. Within hours, the once-close relationship had disintegrated in full public view, as the world's most powerful man and its richest launched personal barbs at one another on Trump's Truth Social and Musk's X.
'The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts,' Trump posted on Truth Social, as reported by AP.
Trump said Musk's opposition to the bill was rooted in a provision that would scale back electric vehicle tax credits that benefited Tesla. 'Elon was 'wearing thin,' I asked him to leave, I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!,' Trump posted.
Musk floated the idea of creating a new political party 'that actually represents the 80% in the middle.'
Musk denied that motivation in a post on X, saying he was fine with reducing the EV credits if lawmakers 'ditch the MOUNTAIN of DISGUSTING PORK in the bill.'
After leaving the government, Musk has extensively criticised Trump's proposed Republican legislative package — which Trump has dubbed his 'one big beautiful bill.' Musk argued the plan would worsen the US budget deficit and significantly damage the electric vehicle industry.
The Trump tariffs will cause a recession.
One key provision in the bill would eliminate the federal tax credit of up to $7,500 for buyers of certain EVs, including Tesla models, by the end of 2025 — seven years earlier than scheduled. Analysts at JPMorgan estimate this move could cut Tesla's annual profit by $1.2 billion.
Key Takeaways Musk's warning signals a significant shift in his stance on Trump's policies.
Proposed tariffs could severely impact the electric vehicle market and Tesla's profitability.
The fallout between Musk and Trump highlights the intersection of politics and industry.
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