Trump Threatens to Cut Elon Musk’s Government Contracts as Feud Escalates

By James, Admin
June 5, 2025 – 4:00 PM CST, Chicago, IL

President Donald Trump and billionaire entrepreneur Elon Musk, once allies, are now locked in a heated public feud, with tensions boiling over. The New York Times reports that Trump threatened to terminate billions in government contracts tied to Musk’s companies, SpaceX and Tesla, following a war of words over a proposed tax and spending bill. Musk, a vocal critic, labeled the legislation a “disgusting abomination,” igniting Trump’s ire. The clash marks a dramatic turn for two figures who collaborated closely during Trump’s 2024 campaign.

The roots of this dispute trace back to Musk’s hefty financial support for Trump’s re-election. Reports indicate Musk spent over $270 million through his America PAC and personal contributions, helping secure Trump’s victory in November 2024. In return, Musk briefly co-led the Department of Government Efficiency (DOGE), a Trump initiative to slash federal spending. However, Musk’s abrupt resignation from DOGE in early 2025, citing misalignment with policy, sowed seeds of discord.

The current flashpoint is Trump’s “big, beautiful bill,” a sweeping tax cut and spending package unveiled in late May 2025. Trump claims it will boost the economy, create jobs, and fulfill campaign promises. Musk, however, took to X, his social media platform, to decry the bill’s potential to balloon the federal deficit by trillions. “This is fiscal insanity,” Musk posted, warning of long-term economic damage. His blunt critique drew a fierce response from Trump.

Today Trump lashed out calling Musk “disloyal” and a “selfish billionaire.” He threatened to cancel SpaceX’s NASA contracts, worth billions, and end Tesla’s government incentives. “If Elon doesn’t want to play ball, we don’t need him,” Trump declared. The statement sent shockwaves through financial markets, with Tesla shares plummeting 14% by midday, according to Bloomberg.

Musk fired back on X, escalating the feud to a personal level. He accused Trump of “lying” about their past partnership and made unverified claims about Trump’s ties to Jeffrey Epstein. Musk even suggested Congress consider impeachment, a provocative jab that drew cheers from some followers and outrage from Trump loyalists. Political analysts warn this rhetoric risks alienating Musk from key Republican allies.

Today, Musk announced that SpaceX would begin decommissioning its Dragon spacecraft, critical for International Space Station missions. NASA officials expressed concern, noting no immediate replacement exists. “This could set back U.S. space goals by years,” said Dr. Linda Harper, a former NASA administrator, in a CNN interview.

Tesla, too, is reeling. The potential loss of federal electric vehicle subsidies and contracts threatens its growth, analysts say. Wedbush Securities estimated a $2 billion hit to Tesla’s bottom line if Trump follows through. Investors are jittery, with some calling for Musk to de-escalate and focus on business rather than politics.

The feud’s timing is precarious. Trump, sworn in for his second term in January 2025, is pushing an ambitious agenda amid a divided Congress. Musk, meanwhile, is navigating challenges at SpaceX, Tesla, and X, with regulatory scrutiny intensifying. Both men, known for outsized personalities, appear dug in, raising questions about compromise.
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Experts see parallels to past Trump feuds with business leaders. “Trump thrives on loyalty, and Musk’s criticism feels like betrayal,” said political strategist Mark Reynolds. Yet, their shared history suggests a path forward. Musk’s support for Trump’s 2024 win was pivotal, and Trump once praised Musk as a “genius” driving innovation.

Economic stakes are high. SpaceX’s contracts, including those for lunar missions, underpin U.S. space leadership. Tesla’s role in clean energy aligns with national goals, despite Trump’s skepticism of climate policies. A prolonged rift could harm both, analysts warn, stalling progress in critical sectors.

Public reaction is split. Trump’s base cheers his hardline stance, with #CutElon trending on X. Musk’s supporters, however, rally behind his defiance, praising his willingness to challenge power. Polls from Pew Research show 48% of Americans side with Trump, 42% with Musk, and 10% are undecided.

Could reconciliation happen? Some experts believe so. “Their egos clash, but their goals—innovation, jobs—align,” said economist Rachel Kline. A cooling-off period might help, perhaps brokered by mutual allies in business or politics. Trump’s hints at wanting Musk back for meetings suggest an opening.

If Trump acts on his threats, the fallout could be severe. SpaceX might shift focus to private clients, weakening NASA ties. Tesla could face layoffs or slowed production, denting the EV market. The U.S. risks losing ground to rivals like China in space and tech, warns Harper.

Musk’s next move is unclear. He’s doubled down on X, posting memes mocking Trump and vowing to fight. Yet, his history of pragmatism—seen in past Tesla turnarounds—hints at flexibility. A deal to tweak the bill or restore contracts could mend fences, analysts speculate.
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The feud’s outcome hinges on both men’s willingness to prioritize results over rhetoric. “They’re stronger together than apart,” Reynolds noted. For now, today marks a low point, with markets, policymakers, and the public watching closely.

As the dust settles, the world awaits the next chapter. Will Trump and Musk bury the hatchet, or will this clash reshape America’s political and economic landscape? Only time will tell, but the stakes couldn’t be higher.