Tensions between U.S. President Donald Trump and tech entrepreneur Elon Musk have escalated once again, as Trump publicly threatened to revoke federal subsidies benefiting Musk’s companies and suggested that the billionaire could be “sent back to South Africa”.
The clash follows renewed criticism by Musk of Trump’s proposed economic and defence legislation, which includes tax cuts, increased military and border security spending, and reductions to social welfare programmes such as Medicaid.
Posting on X (formerly Twitter), Musk denounced the legislation as “insane” and proposed the formation of a new political force. “If this insane spending bill passes, the America Party will be formed the next day. Our country needs an alternative to the Democrat-Republican uniparty so that the people actually have a VOICE.”
Trump responded shortly afterwards on his social media platform Truth Social, alleging that Musk’s criticism was disingenuous, as the businessman had long been aware of Trump’s opposition to the electric vehicle (EV) mandate. This policy, introduced under previous administrations, compels manufacturers to ensure a certain percentage of their vehicles are electric.
In the same post, the president suggested that Musk’s business empire is heavily reliant on taxpayer funding. “Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa,” Trump wrote. “No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE. ”
According to data compiled by The Washington Post, Musk and his companies—including Tesla and SpaceX—have received an estimated $38 billion in the form of government contracts, subsidies, tax incentives, and loans over the past two decades. These funds have been a significant contributor to the rapid expansion of Musk’s enterprises.
SpaceX alone has reportedly secured federal contracts worth at least $1 billion annually since 2016. Between 2021 and 2024, that figure increased to a range of $2 to $4 billion per year. Tesla, meanwhile, has received approximately $1 billion in annual subsidies since 2020, according to publicly available data.
Trump further suggested that the Government Efficiency Department (DOGE)—an initiative originally championed by Musk—should review these contracts. “It would save an unbelievable amount of money,” the president wrote.
The feud marks a deterioration in the relationship between the two high-profile figures. Earlier in June, Musk had stepped back from his involvement with DOGE and began voicing sharp opposition to Trump’s economic policies. During an online exchange at the time, Musk made reference to Trump’s name appearing in visitor logs associated with the late Jeffrey Epstein. Musk later retracted the claim and issued a public apology.
The growing rift has potential implications beyond the political arena. Tesla is currently experiencing a decline in European sales amid intensified competition from Chinese EV manufacturers. The company’s brand image has also been affected by Musk’s increasingly erratic public behaviour and controversial statements on social media.
SpaceX, which relies heavily on U.S. government contracts for satellite launches and space infrastructure development, may also find itself in a precarious position. Rival aerospace firm Blue Origin, led by Amazon founder Jeff Bezos, is reportedly seeking to capitalise on the dispute by lobbying for a greater share of federal contracts.
Analysts have noted that while the immediate threat of subsidy removal may be politically motivated, any actual policy shift would likely face legal and bureaucratic obstacles. Nonetheless, the prospect of financial disruption adds a new layer of uncertainty for Musk’s ventures, particularly as Tesla grapples with market headwinds and SpaceX faces rising competition in the commercial space sector.
The latest exchange reflects broader political currents ahead of the 2026 U.S. midterm elections, with Trump positioning himself as a critic of elite tech billionaires despite historically close relationships with some of them. Musk, meanwhile, appears to be attempting to cultivate an image as a political outsider willing to challenge both major parties—though his critics argue this stance is inconsistent with the significant public support his companies have received.
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