The tension between Donald Trump and Elon Musk, particularly escalating in early June 2025, has already shown measurable economic repercussions for the United States, with potential for further impact if the feud persists or worsens. Below, I outline the economic issues tied to their conflict, focusing on specific effects observed and projected risks, integrating relevant insights from available sources.
Economic Issues Stemming from Trump-Musk Tension
Stock Market Volatility, Especially Tesla:
On June 5, 2025, Tesla’s stock plummeted 14.3%, wiping out approximately $150 billion in market value, following Trump’s public threats to terminate government contracts with Musk’s companies and Musk’s retaliatory attacks on Trump’s economic policies. This sharp decline reflects investor concerns about the stability of Tesla amidst the feud, given its reliance on federal support and Musk’s political influence.
The broader market also faced pressure. Earlier in 2025, Trump’s tariff-related policies, which Musk criticized, contributed to a significant market downturn, with the S&P 500 sliding 2.7% on March 10, 2025, marking its worst daily fall of the year. Tesla’s 15% drop that day was partly attributed to Musk’s distraction with Trump administration roles and falling Tesla sales.
Posts on X highlighted severe market reactions, with one noting a 2,200-point Dow plunge and a 25% Tesla stock drop, erasing $130 billion from Musk’s net worth, tied to tariff fears and supply chain concerns. While not independently verified, this reflects sentiment about the feud’s market impact.
Impact on Federal Contracts and Subsidies:
Musk’s companies, notably SpaceX and Tesla, rely heavily on federal contracts and subsidies. SpaceX has received $19 billion from the government since 2008, with ongoing contracts critical for NASA’s space program, including astronaut transport to the International Space Station. Trump’s threat to cancel these contracts, if acted upon, could disrupt SpaceX’s operations and ripple through the aerospace sector, affecting jobs and innovation. However, experts suggest canceling SpaceX contracts is unlikely due to the lack of immediate competitors.
Tesla has benefited from EV tax credits and federal funding for charging stations, which Trump’s “One Big Beautiful Bill” (OBBB) proposes to eliminate. This could hurt Tesla’s competitiveness, though some argue legacy automakers would face greater losses. The removal of EV subsidies could slow the transition to green energy, impacting related industries and consumer adoption rates.
Musk’s brief suggestion to decommission SpaceX’s Dragon spacecraft, later retracted, raised concerns about potential disruptions to U.S. space missions, which could have economic and national security implications.
Tariff-Induced Recession Risks:
Musk warned on June 6, 2025, via X that Trump’s tariffs would cause a recession in the second half of 2025. He argued that Trump’s signature tariffs, part of the OBBB, would shrink the economy by increasing consumer prices and disrupting trade. The Congressional Budget Office (CBO) supports this, stating that Trump’s tariff plan would reduce the deficit but contract economic output.
Economists, including 23 Nobel Prize winners, have cautioned that Trump’s economic policies, including tariffs, mass deportations, and tax cuts, could lead to higher prices, larger deficits, and greater inequality, potentially sparking an economic calamity. Musk’s earlier comments in October 2024 echoed this, predicting “temporary hardship” and market turmoil from Trump’s plans, though he foresaw a recovery to a “healthier” economy.
Posts on X, such as one from Senator Rand Paul, warned of “massive fallout” in industries like housing, steel, cars, and bourbon due to retaliatory tariffs, amplifying recession fears. Another user noted that Trump’s trade policies could harm U.S. companies abroad through retaliatory measures, driving inflation.
Impact on Government Efficiency and Spending:
Musk’s role in the Department of Government Efficiency (DOGE) aimed to cut federal spending by $2 trillion, but his departure on May 30, 2025, and the feud with Trump have jeopardized these efforts. DOGE’s estimated savings of $175 billion are unverified, and resistance from cabinet members and Congress suggests limited progress.
The feud complicates passage of the OBBB, which nonpartisan analysts estimate will add $2.4–$3 trillion to the national debt over a decade. Musk’s opposition, calling it a “disgusting abomination,” has created uncertainty, potentially delaying or altering fiscal policy and affecting investor confidence.
A post on X claimed that Trump and Musk’s policies, including tariffs, have hurt industries like soybean production in Illinois, suggesting broader agricultural economic losses.
Investor and Consumer Confidence:
The public nature of the Trump-Musk feud has rattled investors, as seen in Tesla’s stock fluctuations and broader market declines. The uncertainty over government contracts, subsidies, and tariffs undermines confidence in sectors tied to Musk’s businesses, such as electric vehicles, aerospace, and broadband (via Star link).
Consumer confidence could weaken if tariffs raise prices, as economists predict. Trump’s acknowledgment of a “little disturbance” or “period of transition” in the economy, combined with Musk’s recession warnings, may further erode public trust. Musk’s public opinion is polarized, with 58% of Americans viewing him unfavorably in a May 2025 poll, which could affect consumer behavior toward his brands.
Broader Economic Policy Uncertainty:
The feud highlights a clash between Trump’s protectionist, big-spending agenda and Musk’s austerity-driven, deficit-reduction goals. This discord could stall critical economic legislation, prolonging uncertainty in trade, tax, and regulatory policies. Musk’s suggestion of forming a new political party, “The America Party,” to represent centrists, signals potential political fragmentation, which could complicate economic policymaking and weaken Republican cohesion in Congress. If Trump follows through on reviewing Musk’s contracts, as stated on June 6, 2025, it could trigger legal and economic disputes, further destabilizing markets
Potential Future Economic Risks
Prolonged Feud: If Trump and Musk fail to reconcile, ongoing public spats could exacerbate market volatility, particularly for Tesla and related sectors. Trump’s consideration of selling his Tesla Model S signals a personal commitment to the feud, which may influence policy decisions.
Policy Retaliation: Trump’s threat to use government power to penalize Musk’s companies, described as an abuse of power, could set a precedent for targeting other businesses, chilling investment and innovation.
Recession Probability: Musk’s recession prediction aligns with economists’ warnings about Trump’s tariffs and spending. A contraction could reduce GDP, increase unemployment (already up slightly to 4.1% in February 2025), and strain consumer spending.
Global Trade Disruptions: Retaliatory tariffs from trading partners like Canada, Mexico, and China, as noted in posts on X, could harm U.S. exports, particularly in agriculture and manufacturing, leading to job losses and higher prices.
Space and Tech Sector Impacts: Disrupting SpaceX’s role in NASA or Pentagon contracts could delay U.S. space exploration and national security projects, with economic consequences for the aerospace industry. Star link’s potential loss of broadband subsidies could also limit rural internet expansion, affecting economic development.
Critical Considerations- While the feud has immediate economic effects, such as Tesla’s stock drop and market unease, some impacts, like a full recession, remain speculative and depend on policy implementation. Musk’s warnings about tariffs align with mainstream economic critiques, but his earlier support for Trump’s agenda suggests a complex stance. Trump’s claim that economic growth will offset policy costs lacks evidence, as CBO and economists project debt increases and economic contraction. X posts reflect polarized sentiments, with some blaming Trump and Musk for economic woes and others seeing tariffs as a necessary reset, but these are not conclusive evidence.
The Trump-Musk tension has already triggered significant economic fallout, including a $150 billion Tesla market value loss, broader stock market declines, and heightened recession fears due to Trump’s tariffs and spending plans. Potential risks include disrupted federal contracts, stalled fiscal reforms, and global trade retaliation, which could deepen economic instability. While reconciliation efforts were reported on June 6, 2025, Trump’s later dismissal of talks suggests ongoing uncertainty.
Note- Sources like The New York Times provide detailed coverage, though X posts should be treated cautiously due to potential bias.
