Trump threatens to cut Elon Musk's government contracts
What's the story
In a dramatic turn of events, United States President Donald Trump has threatened to terminate the government contracts and subsidies of billionaire entrepreneur Elon Musk. The threat comes after Musk publicly criticized Trump's proposed tax cuts and spending plans, calling them a "disgusting abomination." The two have had a close relationship in the past, with Musk even supporting Trump's presidential campaign, spending at least $250 million backing it. However, their alliance appears to have soured, with Musk leaving DOGE recently.
Trump's threat
Trump posts on Truth Social
Taking to his social media platform Truth Social, Trump wrote, "The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts." He added, "I was always surprised that Biden didn't do it!" Musk's companies, including SpaceX and Tesla, heavily rely on government contracts worth tens of billions of dollars.
Government contracts
Musk has received $38 billion in government contracts
Musk's businesses have reportedly received at least $38 billion over the years in government contracts, loans, subsidies, and tax credits. This includes $22 billion in federal spending for SpaceX and over $11 billion in regulatory credits for Tesla from federal and state governments. Nearly two-thirds of this funding has been promised to Musk's companies in the past five years.
Musk's reaction
Musk responds to Trump
In another post, Trump wrote, "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!" Musk responded to Trump on X (formerly Twitter), saying, "Such an obvious lie. So sad." He also reiterated his indifference toward the EV tax credits but called for cuts in government spending increases.
Implications
Tesla's shares have already plunged around 14%
If Trump follows through with his threat to cut Musk's government contracts, it could have severe implications for Musk's businesses. Without these contracts and tax incentives, Tesla's already existing crisis could worsen. Moreover, the recent feud has already caused Tesla's shares to plunge around 14%, indicating investor concern over the potential fallout of this public spat between Musk and Trump. Musk also tweeted that he would decommission the Dragon spacecraft "immediately."
Twitter Post
Musk to decommission Dragon spacecraft
In light of the President’s statement about cancellation of my government contracts, @SpaceX will begin decommissioning its Dragon spacecraft immediately pic.twitter.com/NG9sijjkgW
— Elon Musk (@elonmusk) June 5, 2025
Political implications
Musk hints at creating new political party in America
Musk has also hinted at creating a "new political party in America" to represent the "80% in the middle." While his supporters on X have shown enthusiasm for this idea, with 83% voting "yes" in a poll, the billionaire seems to be enjoying what is unfolding. He tweeted, "One thing's for sure, it ain't boring!" Whether he will actually go through with this plan remains uncertain.