Musk-Trump Feud Escalates, Threatening Billions in Government Contracts and Tesla’s Stability

Elon Musk’s renewed public feud with President Donald Trump threatens to destabilize his business empire, as the billionaire’s criticism of Trump’s sweeping tax and spending cuts bill could jeopardize billions of dollars in federal contracts and trigger political retaliation.

On Tuesday, following the Senate’s passage of the bill, Trump hinted at possible punitive measures, even suggesting Musk might be deported to his native South Africa. "DOGE is the monster that might have to go back and eat Elon," Trump said, referring to Musk’s Department of Government Efficiency. The comment was made as the president departed the White House for an immigration center tour in Florida.

Trump’s morning post on his Truth Social platform went further, warning that Musk’s federal funding may dry up and mockingly suggesting he “would probably have to close up shop and head back home to South Africa.” Though Musk became a U.S. citizen in 2002, questions now swirl around the unprecedented notion of potential denaturalization.

In response, Musk posted on X, “So tempting to escalate this. So, so tempting. But I will refrain for now.” Neither SpaceX nor Tesla commented publicly on the matter.

Musk has fiercely opposed the bill, calling it a financial disaster for American industry and threatening political action against its supporters. On Monday, he vowed to campaign against every lawmaker who voted in favor. “They will lose their primary next year if it is the last thing I do on this Earth,” he wrote. He also ridiculed the Republican Party as “the PORKY PIG PARTY!!” and floated the idea of launching a new political movement.

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Trump dismissed Musk’s opposition as self-serving, accusing him of being upset about the rollback of Biden-era green energy tax credits, which could negatively impact Tesla’s finances. “Elon may get more subsidy than any human being in history,” Trump wrote.

The confrontation places high stakes on Musk’s businesses. SpaceX, Musk’s aerospace company, holds multibillion-dollar contracts with NASA, including plans to send astronauts to the moon. Trump questioned the value of such ventures, writing, “No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE. BIG MONEY TO BE SAVED!!!”

The tension has already impacted markets. Tesla stock fell 5.3% on Tuesday, rattling investors and hurting major index funds linked to Americans’ retirement portfolios. Tesla is a key component of the S\&P 500’s “Magnificent Seven” companies, alongside Apple and Alphabet.

Meanwhile, Musk faces mounting pressure at Tesla. The company’s sales have slumped globally, with European numbers showing a 28% drop in May — the fifth consecutive monthly decline. Musk has blamed the downturn partly on customer boycotts tied to his political stances, but also on anticipation surrounding the revamped Model Y SUV. However, sales have not rebounded since the update’s release.

Complicating matters further is Tesla’s fledgling robotaxi project in Austin, Texas. The autonomous vehicle service, which Musk views as crucial to Tesla’s future, is under scrutiny. The National Highway Traffic Safety Administration (NHTSA) is investigating after videos surfaced of robotaxis driving erratically, including one in the wrong lane. The probe follows a separate investigation into 2.4 million Teslas with full self-driving software after several crashes.

The feud with Trump has left Musk politically isolated. Once a Trump ally, he now finds himself at odds with both ends of the political spectrum — alienating liberals due to past ties with Trump and now facing retaliation from the former president himself.

“In a bizzarro world, he’s alienated both sides,” said Wedbush Securities analyst Dan Ives. “It seems impossible, but he’s actually done it.”