Why Musk's feud with Trump could jeopardize his business empire
Elon Musk, the world's richest man, may have made himself an enemy of the world's most powerful leader.
The public blowout between Musk and President Trump is threatening the tech billionaire's businesses, some of which have billions of dollars' worth of federal contracts. Musk's aerospace company SpaceX alone reportedly has at least $22 billion in federal contracts — which Trump had threatened to revoke at the peak of his feud with his former adviser.
'Trump goes after people, companies and organizations he doesn't like,' said Peter Loge, a professor at George Washington University and former senior FDA adviser during the Obama administration.
'As a real estate developer, politician and president, he has used every tool at his disposal to punish people he thinks have wronged him,' Loge added. 'Unless Musk expresses contrition, Trump is likely to hurt him in every way he can think of. If Musk is contrite, he can be welcomed back into the Trump tent.'
While the two could reconcile in the future, observers agree the dramatic turn of events leaves Musk's business empire vulnerable to Trump's wrath.
Trump, at one point during Thursday's back-and-forth, threatened to cut Musk's government contracts as he called his former adviser 'crazy.'
'The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts. I was always surprised that Biden didn't do it!' Trump wrote in a Truth Social post.
Musk, in turn, said he would decommission SpaceX's Dragon spacecraft, which is responsible for ferrying astronauts and cargo to and from the International Space Station. He later backed off, after an X user urged him to 'cool off and take a step back.'
The exchange underscored how Musk's business ventures could get caught in the crosshairs of any feud with the president, who is known to have a proclivity for retribution.
'If this turns into a hot war, certainly, the consequences for Musk's business relationship with the federal government could be in peril, or at least significantly complicated,' said GOP strategist and Trump campaign alum Brian Seitchik.
The tech billionaire officially departed the White House last week after a four-month stint in government in which he seemed to rarely leave Trump's side, becoming a near constant presence at Mar-a-Lago, Cabinet meetings and the Oval Office.
He exited the administration seemingly on good terms with Trump despite his pushback against the president's sweeping tax and spending bill — the centerpiece of Trump's domestic policy agenda, which is projected to add trillions of dollars to the deficit.
Trump presented Musk with a golden key to the White House during a Friday farewell ceremony in Oval Office, during which the duo downplayed their differences and spoke highly of each other's work.
However, Musk sharpened his criticism of Trump's 'big, beautiful bill' soon after, as he slammed the legislation as a 'disgusting abomination.'
The president responded Thursday, saying he was 'very surprised' and 'disappointed' by Musk's comments and cast doubt on the future of their relationship.
'Elon and I had a great relationship. I don't know if we will anymore,' Trump said during an Oval Office appearance alongside German Chancellor Friedrich Merz.
The situation quickly devolved into personal attacks.
Musk fired back on his social platform X, suggesting the president would have lost the 2024 election without him, linking Trump to disgraced financier Jeffrey Epstein and backing calls for the president's impeachment.
As the feud dragged on Thursday, Tesla's stock plunged 14 percent Thursday, costing the electric vehicle maker more than $150 billion.
The company was still trying to fully recover from the fallout of Musk's highly controversial role in the Trump administration, leading the Department of Government Efficiency (DOGE). Tesla's stock is down 20 percent since the start of the year.
'The social media and war of words back and forth is not good for anyone and put massive pressure on Tesla shares with fears that Trump will turn from friend to foe and create a tough regulatory environment for Musk in the Beltway,' Wedbush Securities analysts wrote in a note Friday.
'Musk needs Trump and Trump needs Musk for many reasons, and these two becoming friends again will be a huge relief for Tesla shares,' they added.
Ross Gerber, a longtime Tesla investor and CEO of Gerber Kawasaki Wealth and Investment Management, slammed Musk for the ripple effects his comments may have had on Tesla's stock.
'Trump is an angry and vindictive man who doesn't forget when slighted. This doesn't get solved other than Elon groveling back and publicly apologizing,' Gerber wrote on X Friday, adding in an earlier post, 'So Tesla investors are down $140 billion over this break up. About how much Musk claimed to saving for the US government.'
As the back-and-forth unfolded Thursday, Gerber quipped, 'Can someone please take the phone away from him [Musk].'
When pressed on the feud, White House press secretary Karoline Leavitt said Musk has a right to speak for his companies.
'So the only difference between Friday and today is Elon went back to his companies. And, as a businessman, he has a right to speak for his companies. But as president, President Trump has a responsibility to fight for this country,' she said Thursday on FOX News Channel's 'Hannity.'
While Trump could pose new risks to Musk's business outlooks, analysts say the fight could also impede the president's ability to run the government.
SpaceX held federal contracts with agencies like NASA and the Pentagon long before Trump's presidency, becoming a crucial partner to the federal government as it phased out the space shuttle program.
If Musk reverses on his decision to keep Dragon in commission, experts say it could debilitate the U.S. space program
'If such threats were carried out, it would be catastrophic,' said space policy expert Mark Whittington, adding later, 'Without SpaceX, we're back to being dependent on the Russians.'
NASA has increasingly relied on SpaceX for its infrastructure, including the Dragon capsule, which is the only U.S. system capable of getting crews to the International Space Station.
Russia's Souyuz capsules, the Associated Press reported, are the only other way to get crews to the space station.
While both Trump and Musk have much to lose from a war, some Republicans veterans aren't ruling out the chance of a reconciliation.
'There's always the possibility that Trump is serious about this, but I think if you take the 'Art of the Deal' seriously, he is often maximally negotiating,' said GOP strategist Chris Johnson.
The feud appeared to cool slightly Friday morning, as Musk seemingly agreed with a post from hedge fund manager Bill Ackman, who suggested the pair 'should make peace for the benefit of our great country.'
But Trump has shown no desire to talk to Musk despite reports the two might speak on the phone.
'I won't be speaking to him for a while, I guess, but I wish him well,' Trump told CNN's Dana Bash on Friday.
Tesla's stock partially recovered amid hopes of a détente, rising 5 percent.
'If Musk is able to sue for peace and the onus is on him to make peace with Trump, then it'll be a blip in the screen and their bromance will be restored,' Seitchik told The Hill.
However, he added, 'If this call goes poorly and this continues to escalate, then certainly Trump will look for every bit of leverage to inflict pain on Elon Musk and his businesses.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Wall Street Journal
13 minutes ago
- Wall Street Journal
Treasury Yields Rise on Stable Employment Ahead of CPI
1600 ET – U.S. job creation slows less than expected, reducing odds of a dovish Fed. Bond markets react with a selloff that boosts yields. May's job creation slows less than forecast and unemployment remains at 4.2%. CME data show diminishing odds of a rate cut before September. Two or more cuts this year still represent the highest odds, but bets on only one or no cut rise. Wells Fargo foresees May's 12-month core CPI, due Wednesday, accelerating to 3.3% from April's 2.8%. The 10-year gains 0.089 percentage point this week, including 0.155 p.p. today, to 4.507%. The two-year rises 0.125 p.p. in the week and 0.115 p.p. today, to 4.039%. ( @ptrevisani) 0846 ET – U.S. job creation didn't slow as much as expected in May, spurring a bonds selloff that takes Treasury yields higher. May payrolls slowed to 139,000 from a downwardly revised 147,000. Economists surveyed by WSJ forecast 125,000. Unemployment was unchanged at 4.2%, as expected. The data likely supports expectations of a Fed hold. Yields were already rising ahead of payrolls, as markets watched the Trump-Musk break up. They rose faster after the data, particularly in longer maturities. The 10-year trades at 4.452%% and the two-year at 3.985%. ( @ptrevisani)
Fox News
16 minutes ago
- Fox News
Lara Trump: China wants to replace us
All times eastern FOX News Saturday Night with Jimmy Failla FOX News Radio Live Channel Coverage WATCH LIVE: President Trump attends UFC event in Newark, New Jersey
USA Today
16 minutes ago
- USA Today
4 Social Security changes Washington could make to prevent benefit cuts
4 Social Security changes Washington could make to prevent benefit cuts Show Caption Hide Caption Biden criticizes Trump administration's handling of Social Security Social Security overhaul sparks criticism from Biden over service disruptions, layoffs and automation as Trump defends changes as efficiency. Straight Arrow News Social Security is an important source of income for millions of Americans, but the program has a serious financial problem. Costs have increased faster than revenues in recent years because the aging population is growing more quickly than the working population. As a result, the trust fund, the financial account that pays benefits, is on track to be depleted within a decade. Specifically, the Congressional Budget Office estimates the trust fund will be exhausted in 2034. That would eliminate one source of revenue (i.e., interest earned on trust fund reserves), and the remaining tax revenues would only cover 77% of scheduled payments. That means a 23% benefit cut would be necessary in 2035. Fortunately, the lawmakers in Washington have several years to find a better solution. Here are four Social Security changes that could prevent deep, across-the-board benefit cuts. 1. Apply the Social Security payroll tax to income above $400,000 Social Security is primarily funded by a dedicated payroll tax, which takes 6.2% of wages from workers and employers. But some income is exempt from the payroll tax. Specifically, the maximum taxable earnings limit is $176,100 in 2025. Income above that threshold is not taxed by Social Security. Importantly, the Social Security program is projected to run a $23 trillion deficit over the next 75 years as it's strained by shifting demographics. But the deficit could be slashed by applying the payroll tax to more income. For instance, including income above $400,000 would eliminate 60% of the 75-year funding shortfall, says the University of Maryland. 2. Gradually increase the Social Security payroll tax rate to 6.5% over six years Under current law, the Social Security payroll tax rate is 6.2% for workers and their employers. But gradually raising that figure would eliminate a portion of the long-term deficit. For example, increasing thetax rate by 0.05% annually over a six-year period would eliminate 15% of the 75-year funding shortfall, according to the University of Maryland. Now that I've discussed two possible changes, let's step back and look at the big picture. There are basically three ways to resolve Social Security's financial problems: (1) increase revenue, (2) reduce costs or (3) some combination of the first two options. The changes discussed so far would increase revenue, but the next two changes would cut benefits. However, they are more subtle cuts than the 23% across-the-board reduction that would follow trust fund depletion. 3. Gradually increase full retirement age to 68 by 2033 Workers are eligible for retirement benefits at age 62, but they are not entitled to their full benefit — also called the primary insurance amount (PIA) — until full retirement age (FRA). Anyone that claims before full retirement age receives a smaller payout, meaning they get less than 100% of their PIA. FRA is currently defined as 67 years old for workers born in 1960 or later, but raising the figure would reduce the long-term deficit. For instance, increasing FRA to 68 years old by 2033, meaning it would apply to workers born in 1965 or later, would eliminate 15% of the 75-year funding shortfall, according to the University of Maryland. 4. Reduce benefits for retired workers with income in the top 20% Social Security benefits are determined as percentages of two bend points. Specifically, income from the 35 highest-paid years of work is adjusted for inflation and converted to a monthly figure called the average indexed monthly earnings (AIME) amount. The AIME is then run through a formula that uses two bend points to determine the PIA for each worker. Modifying the second (highest) bend point would eliminate a portion of the long-term deficit by reducing benefits for high earners. For instance, the University of Maryland estimates that reducing benefits for individuals with income in the top 20% could reduce the 75-year funding deficit by 11%. Here's the big picture: The four changes I've discussed would eliminate 101% of Social Security's $23 trillion funding shortfall, which would prevent across-the-board benefit cuts in 2035. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. The $23,760 Social Security bonus most retirees completely overlook Offer from the Motley Fool: If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets"could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. JoinStock Advisorto learn more about these strategies. View the "Social Security secrets" »
