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CNET
12 minutes ago
- Business
- CNET
Trump's Tariffs Explained: What You Need to Know as Inflation Picks Up Again
The off-again, on-again nature of US tariffs in 2025 has many consumers anxious about the future. James Martin/CNET The One Big Beautiful Bill might've made it across the finish line but tariffs still remain the dominant focus of President Donald Trump's economic agenda. This is especially true as the US Labor Department announced recently that consumer prices rose 2.7% in June, the highest spike since February, and a report from CNBC found that prices at Walmart, one of the largest retailers in the US, have steadily gone up since Trump's tariffs entered the conversation. After unleashing market chaos on April 2 ("Liberation Day") when he unveiled a laundry list of heavy tariffs for countries around the world, they were paused for 90 days after the stock market dramatically tumbled. That 90-day pause was supposed to end earlier this month but have been been extended again through Aug. 1. More recently, the administration hiked tariffs against Canada to 35% and threatened Brazil with a 50% rate. Amid the uncertainties and upheavals, Trump has barreled forward with his plans, including doubling the tariffs on steel and aluminum imports and announcing a new plan to increase the rate for China to 55%. He also hyped up a trade deal on July 2 that leaves Vietnam's import tax rate at a historically high 20%. The sweeping tariff initiative will likely affect your cost of living, which we know from our surveys is something you're worried about. That all came after Trump's push hit its biggest roadblock yet, when the US Court of International Trade ruled late last month that Trump had overstepped his authority when he imposed tariffs. That ruling was stayed, but the fight is likely to head to the Supreme Court. All the while, major US companies like Apple and Walmart have butted heads with the administration over the tariffs and their bluntness about how tariffs will make affording things harder for consumers. Should You Buy Now or Wait? Our Experts Weigh In on Tariffs Should You Buy Now or Wait? Our Experts Weigh In on Tariffs Click to unmute Video Player is loading. Play Video Play Skip Backward Skip Forward Next playlist item Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 Share Fullscreen This is a modal window. This video is either unavailable or not supported in this browser Error Code: MEDIA_ERR_SRC_NOT_SUPPORTED The media could not be loaded, either because the server or network failed or because the format is not supported. Technical details : Session ID: 2025-07-25:dce0bd601bb37e029646c8a1 Player Element ID: vjs_video_3 OK Close Modal Dialog Beginning of dialog window. 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Our Experts Weigh In on Tariffs Amid all this noise, you might still be wondering: What exactly are tariffs, and what will they mean for me? The short answer: Expect to pay more for at least some goods and services. For the long answer, keep reading, and for more, check out CNET's price tracker for 11 popular and tariff-vulnerable products. What are tariffs? Put simply, a tariff is a tax on the cost of importing or exporting goods by a particular country. So, for example, a 60% tariff on Chinese imports would be a 60% tax on the price of importing, say, computer components from China. Trump has been fixated on imports as the centerpiece of his economic plans, often claiming that the money collected from taxes on imported goods would help finance other parts of his agenda. The US imports $3 trillion worth of goods from other countries annually. The president has also shown a fixation on trade deficits, claiming that the US having a trade deficit with any country means that country is ripping the US off. This is a flawed understanding of the matter, many economists have said, since deficits are often a simple case of resource realities: Wealthy nations like the US buy specific things from nations that have them, while those nations in turn may not be wealthy enough to buy much of anything from the US. While Trump deployed tariffs in his first term, notably against China, he ramped up his plans more significantly for the 2024 campaign, promising 60% tariffs against China and a universal 20% tariff on all imports into the US. "Tariffs are the greatest thing ever invented," Trump said at a campaign stop in Michigan last year. At one point, he called himself "Tariff Man" in a post on Truth Social. Who pays the cost of tariffs? Trump repeatedly claimed, before and immediately after returning to the White House, that the country of origin for an imported good pays the cost of the tariffs and that Americans would not see any price increases from them. However, as economists and fact-checkers stressed, this is not the case. The companies importing the tariffed goods -- American companies or organizations in this case -- pay the higher costs. To compensate, companies can raise their prices or absorb the additional costs themselves. So, who ends up paying the price for tariffs? In the end, usually you, the consumer. For instance, a universal tariff on goods from Canada would increase Canadian lumber prices, which would have the knock-on effect of making construction and home renovations more expensive for US consumers. While it is possible for a company to absorb the costs of tariffs without increasing prices, this is not at all likely, at least for now. Speaking with CNET, Ryan Reith, vice president of International Data Corporation's worldwide mobile device tracking programs, explained that price hikes from tariffs, especially on technology and hardware, are inevitable in the short term. He estimated that the full amount imposed on imports by Trump's tariffs would be passed on to consumers, which he called the "cost pass-through." Any potential efforts for companies to absorb the new costs themselves would come in the future, once they have a better understanding of the tariffs, if at all. Which Trump tariffs have gone into effect? Following Trump's "Liberation Day" announcements on April 2 and subsequent shifting by the president, the following tariffs are in effect: A 50% tariff on all steel and aluminum imports, doubled from 25% as of June 4. A 30% tariff on all Chinese imports until the new deal touted by Trump takes effect, after which it will purportedly go up to 55%. China being a major focus of Trump's trade agenda, it has faced a rate notably higher than other countries, peaking at 145% before trade talks commenced. 25% tariffs on imports from Mexico and 35% on those from Canada. This applies only to goods from each country that are not covered under the 2018 USMCA trade agreement brokered during Trump's first term. The deal covers roughly half of all imports from Canada and about a third of those from Mexico, so the rest are subject to the new tariffs. Energy imports not covered by USMCA will be taxed at only 10%. A 25% tariff on all foreign-made cars and auto parts. A sweeping overall 10% tariff on all imported goods. For certain countries that Trump said were more responsible for the US trade deficit, Trump imposed what he called "reciprocal" tariffs that exceed the 10% level: 20% for the 27 nations that make up the European Union, 26% for India, 24% for Japan and so on. These were meant to take effect on April 9 but were delayed by 90 days due to historic stock market volatility, and then delayed again to Aug. 1. These rates are subject to change until that new effective date, and some have already been altered: the rate against Japan was upped to 25%, the same as the rate against South Korea; Trump has also threatened a 50% rate against Brazil. Another deal announced on July 23 lowered Japan's rate to 15%. Trump's claim that these reciprocal tariffs are based on high tariffs imposed against the US by the targeted countries has drawn intense pushback from experts and economists, who have argued that some of these numbers are false or potentially inflated. For example, the above chart says a 39% tariff from the EU, despite its average tariff for US goods being around 3%. Some of the tariffs are against places that are not countries but tiny territories of other nations. The Heard and McDonald Islands, for example, are uninhabited. We'll dig into the confusion around these calculations below. Notably, that minimum 10% tariff will not be on top of those steel, aluminum and auto tariffs. Canada and Mexico were also spared from the 10% minimum additional tariff imposed on all countries the US trades with. On April 11, the administration said smartphones, laptops and other consumer electronics, along with flat panel displays, memory chips and semiconductors, were exempt from reciprocal tariffs. But it wasn't clear whether that would remain the case or whether such products might face different fees later. How were the Trump reciprocal tariffs calculated? The numbers released by the Trump administration for its barrage of "reciprocal" tariffs led to widespread confusion among experts. Trump's own claim that these new rates were derived by halving the tariffs already imposed against the US by certain countries was widely disputed, with critics noting that some of the numbers listed for certain countries were much higher than the actual rates and some countries had tariff rates listed despite not specifically having tariffs against the US at all. In a post to X that spread fast across social media, finance journalist James Surowiecki said that the new reciprocal rates appeared to have been reached by taking the trade deficit the US has with each country and dividing it by the amount the country exports to the US. This, he explained, consistently produced the reciprocal tariff percentages revealed by the White House across the board. "What extraordinary nonsense this is," Surowiecki wrote about the finding. The White House later attempted to debunk this idea, releasing what it claimed was the real formula, though it was quickly determined that this formula was arguably just a more complex version of the one Surowiecki deduced. What will the Trump tariffs do to prices? In short: Prices are almost certainly going up, if not now, then eventually. That is, if the products even make it to US shelves at all, as some tariffs will simply be too high for companies to bother dealing with. While the effects of a lot of tariffs might not be felt straight away, some potential real-world examples have already emerged. Microsoft has increased prices across the board for its Xbox gaming brand, with its flagship Xbox Series X console jumping 20% from $500 to $600. Kent International, one of the main suppliers of bicycles to Walmart, announced that it would be stopping imports from China, which account for 90% of its stock. Speaking about Trump's tariff plans just before they were announced, White House trade adviser Peter Navarro said that they would generate $6 trillion in revenue over the next decade. Given that tariffs are most often paid by consumers, CNN characterized this as potentially "the largest tax hike in US history." Estimates from the Yale Budget Lab, cited by Axios, predict that Trump's new tariffs will cause a 2.3% increase in inflation throughout 2025. This translates to about a $3,800 increase in expenses for the average American household. Reith, the IDC analyst, told CNET that Chinese-based tech companies, like PC makers Acer, Asus and Lenovo, have "100% exposure" to these import taxes, with products like phones and computers the most likely to take a hit. He also said that the companies best positioned to weather the tariff impacts are those that have moved some of their operations out of China to places like India, Thailand and Vietnam, singling out the likes of Apple, Dell and HP. Samsung, based in South Korea, is also likely to avoid the full force of Trump's tariffs. In an effort to minimize its tariff vulnerability, Apple has begun to move the production of goods for the US market from China to India. Will tariffs affect prices immediately? In the short term -- the first days or weeks after a tariff takes effect -- maybe not. There are still a lot of products in the US imported pre-tariffs and on store shelves, meaning the businesses don't need a price hike to recoup import taxes. Once new products need to be brought in from overseas, that's when you'll see prices start to climb because of tariffs or you'll see them become unavailable. That uncertainty has made consumers anxious. CNET's survey revealed that about 38% of shoppers feel pressured to make certain purchases before tariffs make them more expensive. About 10% say they have already made certain purchases in hopes of getting them in before the price hikes, while 27% said they have delayed purchases for products that cost more than $500. Generally, this worry is the most acute concerning smartphones, laptops and home appliances. Mark Cuban, the billionaire businessman and Trump critic, voiced concerns about when to buy certain things in a post on Bluesky just after Trump's "Liberation Day" announcements. In it, he suggested that consumers might want to stock up on certain items before tariff inflation hits. "It's not a bad idea to go to the local Walmart or big box retailer and buy lots of consumables now," Cuban wrote. "From toothpaste to soap, anything you can find storage space for, buy before they have to replenish inventory. Even if it's made in the USA, they will jack up the price and blame it on tariffs." CNET's Money team recommends that before you make any purchase, especially a high-ticket item, be sure that the expenditure fits within your budget and your spending plans. Buying something you can't afford now because it might be less affordable later can be burdensome, to say the least. What is the goal of the White House tariff plan? The typical goal behind tariffs is to discourage consumers and businesses from buying the tariffed, foreign-sourced goods and encourage them to buy domestically produced goods instead. When implemented in the right way, tariffs are generally seen as a useful way to protect domestic industries. One of the stated intentions for Trump's tariffs is along those lines: to restore American manufacturing and production. However, the White House also says it's negotiating with numerous countries looking for tariff exemptions, and some officials have also floated the idea that the tariffs will help finance Trump's tax cuts. Those things are often contradictory: If manufacturing moves to the US or if a bunch of countries are exempt from tariffs, then tariffs aren't actually being collected and can't be used to finance anything. This and many other points have led a lot of economists to allege that Trump's plans are misguided. As for returning -- or "reshoring" -- manufacturing in the US, tariffs are a better tool for protecting industries that already exist because importers can fall back on them right away. Building up the factories and plants needed for this in the US could take years, leaving Americans to suffer under higher prices in the interim. That problem is worsened by the fact that the materials needed to build those factories will also be tariffed, making the costs of "reshoring" production in the US too heavy for companies to stomach. These issues, and the general instability of American economic policies under Trump, are part of why experts warn that Trump's tariffs could have the opposite effect: keeping manufacturing out of the US and leaving consumers stuck with inflated prices. Any factories that do get built in the US because of tariffs also have a high chance of being automated, canceling out a lot of job creation potential. To give you one real-world example of this: When warning customers of future price hikes, toy maker Mattel also noted that it had no plans to move manufacturing to the US. Trump has reportedly been fixated on the notion that Apple's iPhone -- the most popular smartphone in the US market -- can be manufactured entirely in the US. This has been broadly dismissed by experts, for a lot of the same reasons mentioned above, but also because an American-made iPhone could cost upward of $3,500. One report from 404 Media dubbed the idea "a pure fantasy." The overall sophistication and breadth of China's manufacturing sector have also been cited, with CEO Tim Cook stating in 2017 that the US lacks the number of tooling engineers to make its products. For more, see how tariffs might raise the prices of Apple products and find some expert tips for saving money.
Time of India
43 minutes ago
- Business
- Time of India
Trump claims he's not after Musk's companies as EV subsidies disappear
US President Donald Trump has rejected growing speculation that he's targeting Elon Musk 's companies out of political spite, denying any intention to strip them of government support. 'Everyone is stating that I will destroy Elon's companies by taking away some, if not all, of the large scale subsidies he receives from the US Government ,' Trump said on Truth Social. 'This is not so! I want Elon, and all businesses within our Country, to THRIVE, in fact, THRIVE like never before!' He continued, 'The better they do, the better the USA does, and that's good for all of us. We are setting records every day, and I want to keep it that way!' His comments followed renewed media attention on the growing rift between the two, sparked by Musk 's opposition to a key White House economic bill. Fallout from the 'One Big Beautiful Bill' Tensions escalated after Musk publicly criticised Trump's flagship tax and spending legislation, formally known as the 'One Big Beautiful Bill Act' (OBBBA). The bill, which came into effect on 4 July, scaled back several clean energy incentives and lifted penalties on carmakers that failed to meet fuel efficiency standards. Musk, who had once chaired Trump's Department of Government Efficiency, openly broke ranks. In response, Trump reportedly considered reviewing and potentially cutting government contracts with Musk's companies. This shift marked a dramatic change in tone. Musk had previously donated heavily to Trump's re-election effort and played a key advisory role within his administration. Tesla stock dips after grim forecast Tesla's financial outlook has added fuel to the fire. On Wednesday 24 July, the company warned of difficult months ahead. Speaking during the second-quarter earnings call, Musk said, 'We probably could have a few rough quarters.' The warning came as Tesla posted disappointing revenue numbers. Its stock dropped by 8.2 percent in New York trading that day, continuing a broader 24 percent decline for the year. Tesla Chief Financial Officer Vaibhav Taneja added more detail on the company's earnings call. He said the OBBBA has 'certain adverse impacts' on Tesla's energy business, especially in residential storage. He warned of a dip in both demand and profit as consumer tax credits expired early. Taneja also revealed that new tariffs had already raised costs by around 300 million dollars in the second quarter alone, with further increases expected later this year. In a regulatory filing, Tesla directly referenced the impact of the new law, stating, 'The loss of previously available tax credits and carbon offset mechanisms may further negatively impact our financial results.' It also warned that OBBBA provisions 'could affect battery cell expenses and impact costs for our consumers, negatively impacting demand.' Musk rejects claims of relying on subsidies Responding to Trump's remarks, Musk pushed back strongly. On Thursday, he wrote on X, 'The 'subsidies' he's talking about simply do not exist. DJT has already removed or put an expiry date on all sustainable energy support while leaving massive oil & gas subsidies untouched.' Musk's frustration reflects a broader shift in US federal support for clean energy. Since 2015, Tesla has made over 12 billion dollars from regulatory credit sales, according to FedScout. In the most recent quarter alone, it earned 439 million dollars from these credits, which are part of a system that allows automakers to buy environmental offsets. These incentives have been a key source of revenue, especially as Tesla ramps up investments in autonomous vehicles and next-generation battery tech. Strained ties beyond policy The breakdown between Trump and Musk isn't just about legislation. It turned personal. At the height of the feud, Musk posted and later deleted a claim that Trump's name appeared in files related to Jeffrey Epstein, the disgraced financier and sex offender. The post sparked outrage within Trump's circle and among his supporters. The situation escalated further after The Wall Street Journal reported that Attorney General Pam Bondi had told the president his name was among those in the Epstein files, alongside 'many other high-profile figures.' A Republican-led House committee has now subpoenaed Ghislaine Maxwell, Epstein's convicted accomplice, to testify next month. Trump's team has dismissed the Epstein allegations outright. 'This is nothing more than a continuation of the fake news stories concocted by the Democrats and the liberal media,' White House Communications Director Steven Cheung said. SpaceX, xAI also under scrutiny While Tesla grabs headlines, Musk's other ventures haven't been spared. SpaceX, his aerospace firm, has secured more than 22 billion dollars in US government contracts since 2008. These include key deals with NASA, the Air Force, and Space Force. Following the fallout, the Trump administration ordered a review of SpaceX's contracts. Most were deemed essential and allowed to continue. Despite a brief threat from Musk to pull the Dragon spacecraft used by NASA for space station missions, operations resumed. Musk later clarified, 'SpaceX won the NASA contracts by doing a better job for less money.' Meanwhile, his AI startup xAI is also drawing government attention. Earlier this month, the Pentagon announced that xAI and three other firms had been awarded contracts worth up to 200 million dollars each. But White House Press Secretary Karoline Leavitt indicated that the administration is hesitant about federal agencies collaborating further with Musk's AI projects. Trump and Musk made some effort to dial down hostilities after their public clashes, but the damage is done. Musk's businesses are now navigating policy shifts, rising costs, and political risk, all while investors grow nervous. The relationship between the billionaire entrepreneur and the president he once backed now appears beyond repair. And with both eyeing future influence — one in the tech sphere, the other in the political arena — this uneasy standoff may still have more chapters to come.
Yahoo
6 hours ago
- Business
- Yahoo
Elon Musk fires back at Trump's claim that his companies will still enjoy subsidies
President Donald Trump walked back his earlier attacks on Elon Musk and his companies. Trump said Musk's businesses will continue to enjoy federal subsidies. However, Musk says that the subsidies Trump is "talking about simply do not exist." President Donald Trump said on Thursday that he won't touch the federal subsidies Elon Musk's companies are enjoying because he wants Musk to continue to prosper. Musk, however, begs to differ. "The 'subsidies' he's talking about simply do not exist," Musk wrote in an X post on the same day. The Trump administration has already scrapped or slapped expiry dates on every clean energy incentive "while leaving massive oil & gas subsidies untouched," Musk wrote in his post. Musk's EV company, Tesla, is already feeling the pinch. Tesla said during its earnings call on Wednesday that removing the $7,500 EV credit under Trump's "One Big Beautiful Bill" would affect its US sales. Vaibhav Taneja, the company's chief financial officer, said the "abrupt change" meant the company has a "limited supply of vehicles in the US this quarter." SpaceX, on its part, wins federal contracts on merit, Musk said in his X post on Thursday. Musk said his rocket company is "doing a better job for less money. Rerouting SpaceX's work to "other aerospace companies would leave astronauts stranded and taxpayers on the hook for twice as much," he added. The White House, Tesla, and SpaceX did not respond to requests for comment from Business Insider. Threats and market jitters Musk had been a prominent backer of Trump during last year's presidential campaign and enjoyed a close relationship with Trump. Musk spent at least $277 million supporting Trump and other GOP candidates in the 2024 elections. Shortly after Trump's victory in November, he headed the White House DOGE office and led the administration's cost-cutting efforts. That was until last month, when Musk and Trump began to turn on each other. Their relationship started to break down on June 5, when Musk attacked Trump's signature tax bill in an X post, calling it a "MOUNTAIN of DISGUSTING PORK." He also claimed credit for Trump's victory in last year's election. "Such ingratitude," Musk wrote. Hours later, Trump threatened to cancel Musk's government contracts in a Truth Social post, saying it would be the "easiest way to save money in our Budget." That drew a tit-for-tat response from Musk, who said he would decommission SpaceX's Dragon spacecraft, which is used in NASA missions, before walking it back. Musk expressed regret over what he had said about Trump a few days later. Some of his posts about Trump "went too far," Musk said. The détente, however, didn't last. On July 1, Trump said DOGE should take a "good, hard, look" at Musk's companies after Musk said he would start a new political party and defeat GOP politicians who voted for Trump's tax bill. "Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa," Trump wrote on Truth Social. "No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE," he added. Musk dared Trump to follow through on his threat: "I am literally saying CUT IT ALL. Now." The markets were not as confident as Musk. Tesla's stock fell by 5% after Trump's post on July 1. Tesla's shares are down by over 24% year to date. Musk's business empire has received at least $38 billion in government contracts, loans, subsidies, and tax credits over the last 20 years, per an analysis published by The Washington Post in February. On Wednesday, Musk told investors on Tesla's earnings call that the company is entering a "weird transition period where we will lose a lot of incentives in the US." "Does that mean like we could have a few rough quarters? Yeah, we probably could have a few rough quarters," Musk said. Read the original article on Business Insider
Business Insider
7 hours ago
- Business
- Business Insider
Elon Musk fires back at Trump's claim that his companies will still enjoy subsidies
President Donald Trump said on Thursday that he won't touch the federal subsidies Elon Musk's companies are enjoying because he wants Musk to continue to prosper. Musk, however, begs to differ. "The 'subsidies' he's talking about simply do not exist," Musk wrote in an X post on the same day. The Trump administration has already scrapped or slapped expiry dates on every clean energy incentive "while leaving massive oil & gas subsidies untouched," Musk wrote in his post. Musk's EV company, Tesla, is already feeling the pinch. Tesla said during its earnings call on Wednesday that removing the $7,500 EV credit under Trump's " One Big Beautiful Bill" would affect its US sales. Vaibhav Taneja, the company's chief financial officer, said the "abrupt change" meant the company has a " limited supply of vehicles in the US this quarter." SpaceX, on its part, wins federal contracts on merit, Musk said in his X post on Thursday. Musk said his rocket company is "doing a better job for less money. Rerouting SpaceX's work to "other aerospace companies would leave astronauts stranded and taxpayers on the hook for twice as much," he added. The White House, Tesla, and SpaceX did not respond to requests for comment from Business Insider. Threats and market jitters Musk had been a prominent backer of Trump during last year's presidential campaign and enjoyed a close relationship with Trump. Musk spent at least $277 million supporting Trump and other GOP candidates in the 2024 elections. Shortly after Trump's victory in November, he headed the White House DOGE office and led the administration's cost-cutting efforts. That was until last month, when Musk and Trump began to turn on each other. Their relationship started to break down on June 5, when Musk attacked Trump's signature tax bill in an X post, calling it a "MOUNTAIN of DISGUSTING PORK." He also claimed credit for Trump's victory in last year's election. "Such ingratitude," Musk wrote. Hours later, Trump threatened to cancel Musk's government contracts in a Truth Social post, saying it would be the "easiest way to save money in our Budget." That drew a tit-for-tat response from Musk, who said he would decommission SpaceX's Dragon spacecraft, which is used in NASA missions, before walking it back. Musk expressed regret over what he had said about Trump a few days later. Some of his posts about Trump "went too far," Musk said. The détente, however, didn't last. On July 1, Trump said DOGE should take a "good, hard, look" at Musk's companies after Musk said he would start a new political party and defeat GOP politicians who voted for Trump's tax bill. "Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa," Trump wrote on Truth Social. "No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE," he added. Musk dared Trump to follow through on his threat: "I am literally saying CUT IT ALL. Now." The markets were not as confident as Musk. Tesla's stock fell by 5% after Trump's post on July 1. Tesla's shares are down by over 24% year to date. Musk's business empire has received at least $38 billion in government contracts, loans, subsidies, and tax credits over the last 20 years, per an analysis published by The Washington Post in February. On Wednesday, Musk told investors on Tesla's earnings call that the company is entering a "weird transition period where we will lose a lot of incentives in the US." "Does that mean like we could have a few rough quarters? Yeah, we probably could have a few rough quarters," Musk said.
Time of India
8 hours ago
- Automotive
- Time of India
Trump claims he's not after Musk's companies as EV subsidies disappear
Fallout from the 'One Big Beautiful Bill' Live Events Tesla stock dips after grim forecast Musk rejects claims of relying on subsidies Strained ties beyond policy SpaceX, xAI also under scrutiny (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel US President Donald Trump has rejected growing speculation that he's targeting Elon Musk 's companies out of political spite, denying any intention to strip them of government support.'Everyone is stating that I will destroy Elon's companies by taking away some, if not all, of the large scale subsidies he receives from the US Government ,' Trump said on Truth Social. 'This is not so! I want Elon, and all businesses within our Country, to THRIVE, in fact, THRIVE like never before!'He continued, 'The better they do, the better the USA does, and that's good for all of us. We are setting records every day, and I want to keep it that way!'His comments followed renewed media attention on the growing rift between the two, sparked by Musk 's opposition to a key White House economic escalated after Musk publicly criticised Trump's flagship tax and spending legislation, formally known as the 'One Big Beautiful Bill Act' (OBBBA). The bill, which came into effect on 4 July, scaled back several clean energy incentives and lifted penalties on carmakers that failed to meet fuel efficiency who had once chaired Trump's Department of Government Efficiency, openly broke ranks. In response, Trump reportedly considered reviewing and potentially cutting government contracts with Musk's shift marked a dramatic change in tone. Musk had previously donated heavily to Trump's re-election effort and played a key advisory role within his financial outlook has added fuel to the fire. On Wednesday 24 July, the company warned of difficult months ahead. Speaking during the second-quarter earnings call, Musk said, 'We probably could have a few rough quarters.'The warning came as Tesla posted disappointing revenue numbers. Its stock dropped by 8.2 percent in New York trading that day, continuing a broader 24 percent decline for the year. Tesla Chief Financial Officer Vaibhav Taneja added more detail on the company's earnings call. He said the OBBBA has 'certain adverse impacts' on Tesla's energy business, especially in residential storage. He warned of a dip in both demand and profit as consumer tax credits expired also revealed that new tariffs had already raised costs by around 300 million dollars in the second quarter alone, with further increases expected later this a regulatory filing, Tesla directly referenced the impact of the new law, stating, 'The loss of previously available tax credits and carbon offset mechanisms may further negatively impact our financial results.' It also warned that OBBBA provisions 'could affect battery cell expenses and impact costs for our consumers, negatively impacting demand.'Responding to Trump's remarks, Musk pushed back strongly. On Thursday, he wrote on X, 'The 'subsidies' he's talking about simply do not exist. DJT has already removed or put an expiry date on all sustainable energy support while leaving massive oil & gas subsidies untouched.'Musk's frustration reflects a broader shift in US federal support for clean energy. Since 2015, Tesla has made over 12 billion dollars from regulatory credit sales, according to FedScout. In the most recent quarter alone, it earned 439 million dollars from these credits, which are part of a system that allows automakers to buy environmental incentives have been a key source of revenue, especially as Tesla ramps up investments in autonomous vehicles and next-generation battery breakdown between Trump and Musk isn't just about legislation. It turned personal. At the height of the feud, Musk posted and later deleted a claim that Trump's name appeared in files related to Jeffrey Epstein, the disgraced financier and sex post sparked outrage within Trump's circle and among his supporters. The situation escalated further after The Wall Street Journal reported that Attorney General Pam Bondi had told the president his name was among those in the Epstein files, alongside 'many other high-profile figures.'A Republican-led House committee has now subpoenaed Ghislaine Maxwell, Epstein's convicted accomplice, to testify next month. Trump's team has dismissed the Epstein allegations outright.'This is nothing more than a continuation of the fake news stories concocted by the Democrats and the liberal media,' White House Communications Director Steven Cheung Tesla grabs headlines, Musk's other ventures haven't been spared. SpaceX, his aerospace firm, has secured more than 22 billion dollars in US government contracts since 2008. These include key deals with NASA, the Air Force, and Space the fallout, the Trump administration ordered a review of SpaceX's contracts. Most were deemed essential and allowed to a brief threat from Musk to pull the Dragon spacecraft used by NASA for space station missions, operations resumed. Musk later clarified, 'SpaceX won the NASA contracts by doing a better job for less money.'Meanwhile, his AI startup xAI is also drawing government attention. Earlier this month, the Pentagon announced that xAI and three other firms had been awarded contracts worth up to 200 million dollars each. But White House Press Secretary Karoline Leavitt indicated that the administration is hesitant about federal agencies collaborating further with Musk's AI and Musk made some effort to dial down hostilities after their public clashes, but the damage is done. Musk's businesses are now navigating policy shifts, rising costs, and political risk, all while investors grow relationship between the billionaire entrepreneur and the president he once backed now appears beyond repair. And with both eyeing future influence — one in the tech sphere, the other in the political arena — this uneasy standoff may still have more chapters to come.
