The business world watched in shock as a political spat between President Donald Trump and Elon Musk sent markets into a tailspin. What began as criticism over a spending bill quickly escalated into a full-blown feud with real financial consequences for everyday Americans.
On June 5, 2025, Tesla’s stock plummeted 14% in a single trading session, wiping out approximately $150 billion in market value – the largest one-day loss in the company’s history. This dramatic fall directly affected retirement accounts and pension funds across the country, including New York City’s public pension system, which reportedly lost over $150 million in a single day from its Tesla holdings.
From Allies to Enemies
The relationship between Trump and Musk deteriorated rapidly after Musk publicly condemned Trump’s signature spending bill as a “disgusting abomination” that would explode deficits. Musk urged his followers to “fire all politicians who betrayed the American people.”
Trump’s response was unambiguous. He explicitly warned that Musk would face “serious consequences” if he funded Democratic challengers to GOP lawmakers supporting the bill. When asked if their alliance was over, Trump confirmed: “I would assume so” and added, “I have no intention of speaking to him.”
This public break came immediately after Musk completed his term leading Trump’s Department of Government Efficiency (DOGE), an initiative meant to cut government waste.
The DOGE Reality
While Musk promised substantial cuts to federal spending through DOGE, the actual results appear to have fallen short of the initial $2 trillion target. Various sources report DOGE claimed significant savings, though independent analyses suggest the net benefit may be smaller than officially reported.
The exact figures remain contested, with some reports questioning how many canceled contracts actually resulted in real savings for taxpayers. Even the most generous estimates of DOGE’s accomplishments represent a small fraction of total federal spending – far from the transformational change initially promised.
Government Support and Musk’s Empire
The stakes in this political feud become clearer when examining how government funding has supported Musk’s business empire. Over the years, Musk’s companies have received substantial government contracts, loans, subsidies, and tax credits – with estimates ranging from $38 billion to $48 billion according to various analyses.
SpaceX has won roughly $22 billion in government contracts, with the majority coming from NASA and the Department of Defense. This government support wasn’t merely helpful – it was foundational. Tesla received crucial loans during its early struggles, while SpaceX’s government contracts provided the steady revenue stream that allowed both companies to achieve their current market positions.
Financial Fallout
The human cost of this political theater manifests in real numbers affecting real people. The public feud erased approximately $34 billion from Musk’s personal net worth according to the Bloomberg Billionaires Index – among the largest single-day wealth drops ever recorded.
These losses compound Tesla’s broader struggles. The company reported a 71% decline in profit in its latest quarter, with significant drops in sales. Analysts estimate that Trump’s proposed elimination of the $7,500 federal tax credit for electric vehicles would create an additional $1.2 billion hit to Tesla’s annual profit.
“This is a dangerous game,” warned Wedbush analyst Dan Ives, while CFRA’s Garrett Nelson cited “sell the news” risks around Tesla’s upcoming robotaxi event.
Historical Parallels
The Trump-Musk feud has drawn comparisons to President Nixon’s infamous “enemies list“. While Nixon contemplated using federal power against opponents, he largely kept these impulses private and faced institutional resistance when attempting to act on them.
John Dean, Nixon’s former White House counsel who revealed the enemies list, noted the stark difference: “Everything with Nixon is more or less a one-off, whereas with Trump it is a way of life.”
The current situation represents an escalation from historical precedents. Trump has publicly threatened to terminate federal contracts with Musk’s companies – contracts worth billions and critical to national security infrastructure.
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Space Program Vulnerabilities
The threat to cancel SpaceX contracts reveals America’s dependence on a single company for critical space capabilities. SpaceX provides the only way NASA can fly astronauts to the International Space Station and launches sensitive satellites for the Pentagon and intelligence agencies.
This dependency creates national security vulnerabilities when business relationships become subject to personal political dynamics. The concentration of essential infrastructure in companies dependent on political favor makes America’s national security capabilities vulnerable to personality conflicts.
Political Implications
The feud carries significant political ramifications that extend beyond the immediate participants. Political analysts note that a prolonged conflict could complicate Republican efforts to maintain congressional control in the 2026 midterm elections.
Musk’s substantial financial contributions to Republican candidates in the 2024 election cycle represent resources that could be redirected or withheld. This creates challenges for Republican candidates who must navigate between maintaining Trump’s support while not alienating a major donor.
Vice President JD Vance termed Musk’s attacks “nuclear,” doubting reconciliation: “Maybe that’s not possible now.” However, behind the scenes, Trump reportedly urged those around him “not to pour gasoline on the fire,” suggesting awareness of the political risks.
Musk’s Response
Musk escalated the conflict by making serious accusations against Trump and endorsing impeachment calls – posts he later deleted, signaling an attempted de-escalation.
Perhaps more significantly, Musk suggested creating a centrist political party, with a reported 80% of his social media poll respondents supporting the idea. This move could potentially reshape the political landscape ahead of the 2026 midterms.
Governance Questions
Political scientists have expressed concern about the governance patterns revealed by this feud. The public weaponization of federal power against business interests based on personal relationships rather than policy or performance creates a transactional approach to governance that undermines predictable business environments.
The Atlantic writer Anne Applebaum has noted that President Trump’s attacks on opponents follow a pattern seen in countries experiencing democratic backsliding. A survey of political scientists found that many believe the United States is moving away from liberal democratic norms.
Recent Developments
As of June 10, 2025, there have been signs of potential de-escalation. Trump and Musk reportedly exchanged more cordial public messages, showing the fluid nature of their relationship.
Tesla shares have partially recovered, rebounding approximately 5% on June 6 after White House statements about DOGE’s accomplishments. However, a senior official confirmed that Trump plans to sell his red Model S, suggesting the personal rift remains.
Market Impact and Public Interest
The feud’s impact extends beyond the two men involved. Tesla’s dramatic stock drop affected broader market indices, with the company’s decline accounting for roughly half of the S&P 500 and Nasdaq 100 losses that day. Over 10% of all ETFs hold Tesla, amplifying the fallout.
Meanwhile, state comptrollers from New York and Maryland criticized Tesla’s board for failing to rein in Musk’s “polarizing” behavior, highlighting the governance concerns this episode has raised.
The Future of Business-Government Relations
The Trump-Musk feud raises fundamental questions about how business and government interact in today’s America. When personal relationships can trigger billion-dollar market swings and threaten essential national infrastructure, both democratic governance and market stability face new challenges.
The episode shows how concentrated economic power in a few individuals creates vulnerabilities when those relationships intersect with political power. The financial impacts show how political relationships now directly affect millions of Americans’ financial security through their retirement accounts and investments.
For business leaders, the message is clear: navigating the political landscape now carries both unprecedented opportunities and risks. As one Wall Street analyst noted, “When politics and business mix this way, everyone’s portfolio feels the impact.”
