Musk says Trump's tariffs could trigger US recession by 2025-end
What's the story
Elon Musk, CEO of Tesla and SpaceX, has warned that the aggressive tariffs imposed by US President Donald Trump could lead to a recession in the country by late 2025.
The warning comes amid a public feud between the two former allies.
"The Trump tariffs will cause a recession," Musk said on X (formerly Twitter), marking a stark departure from his previous support for Trump.
Market impact
Tesla stock plummets after Trump criticizes Musk
The feud started when Musk openly criticized Trump's proposed $2.4 trillion budget bill, labeling it a "disgusting abomination."
Trump retaliated by threatening to end federal contracts and subsidies for Musk's companies, including Tesla and SpaceX.
This triggered a crash in Tesla's stock, which plummeted by over 14% in a single day and wiped out nearly $152 billion from the company's market capitalization.
"I'm very disappointed in Elon," Trump told reporters, claiming Musk had previously praised the legislation.
Bill controversy
Without my support, you'd have lost the election: Musk
Musk denied any involvement with the controversial bill, saying it was never shown to him and was passed without his knowledge.
He further claimed that without his support, Trump would have lost the 2024 election.
The spat escalated when Musk alleged that Trump's name appeared in unreleased Jeffrey Epstein files.
"Time to drop the really big bomb: @realDonaldTrump is in the Epstein files," he tweeted.
Contract threats
Musk also threatened to decommission NASA spacecraft
In response to Musk's allegations, Trump threatened to terminate government contracts with his companies, including SpaceX.
In retaliation, Musk said SpaceX would start decommissioning its Dragon spacecraft immediately.
However, the world's richest man soon reversed his decision, saying SpaceX will continue operating its Dragon spacecraft.
This back-and-forth marks a major shift from their previously strong alliance where Musk had been instrumental in Trump's 2024 campaign and even led the Department of Government Efficiency (DOGE).
Economic implications
Trump's tariffs have increased costs for manufacturers like Tesla
Musk's warning about a potential recession due to Trump's tariffs highlights broader economic concerns.
The tariffs, including high duties on China, have increased costs for manufacturers like Tesla.
The overall US tariff rate remains high at 10-15%, contributing to higher prices and inflationary pressures.
However, some economists believe recent drops in imports could help GDP and ease recession fears in the short term.