Compass Investments

Trump threatened to cut subsidies to Musk, directing DOGE to investigate his relationship with the government.

Musk responded by denouncing Trump’s spending bill and announcing a new political party.

Tesla shares plummeted on fears that the conflict would have tangible economic consequences.

Former President Donald Trump has escalated his disagreement with Elon Musk, this time threatening to withdraw multi-billion dollar government support for Musk’s company. In a recent post on Truth Social, Trump hinted that the Department of Government Efficiency (DOGE) may be instructed to take a hard look at Musk’s subsidies, which he said are among the largest ever given to a single person. Ilon may be getting more subsidies than anyone in history, Trump wrote. No more rocket launches, no more satellites, no more electric car production, and our country will save a fortune.

He even joked, perhaps not entirely jokingly, that DOGE might have to go back and eat Elon.

Once close political allies, Musk and Trump are now apparently in a state of open warfare. It wasn’t long ago that Musk was helping the government become more efficient as a special advisor. But after he left his post in May, things quickly soured. Now Trump is claiming that Musk is very upset because he’s losing his mandate to make electric cars – even though there is technically no federal mandate to make electric cars. Nevertheless, Trump blocked California’s proposed requirement to sell electric cars, which Musk lobbied to keep.

Musk did not respond to Trump’s comments directly, but posted a series of barbed responses on social media X. One meme featured a burning Pinocchio with the word LIAR on it, while another threatened retaliation in the election: Legislators who vote for this bill will lose their primaries next year if it’s the last thing I do on this Earth.

The Tesla and SpaceX CEO also floated the idea of creating a new political party if the controversial “big, beautiful bill, as Trump calls it, makes it through Congress. “Our country needs an alternative to the one-party Democrats-Republicans, Musk wrote.

At the heart of it all is Trump’s massive spending bill, which Musk has repeatedly called a “disgusting abomination.

According to the Congressional Budget Office, the bill, which recently passed the Senate, would increase the national debt by $3.3 trillion over a decade. It would also significantly cut Medicaid, leaving 12 million Americans without coverage.

Treasury Secretary Scott Bessent brushed off Musk’s criticism, telling Fox News: “I admire Elon’s leadership on rockets. I’ll take care of the finances.

While Trump and Musk traded barbs, DOGE – originally created as a cost-cutting agency – suddenly became a political weapon. Now Trump is hinting that it could be used to reevaluate Musk’s vast portfolio of government-backed businesses. These include Tesla, SpaceX and other Musk-affiliated companies that have received about $38 billion in loans, contracts and subsidies, according to The Washington Post.

The markets did not take the spat lightly. Tesla shares were down 6 percent before trading began Tuesday. While they’re still up from their spring lows, they’re down 21% for the day today. Investors seem to fear that Trump’s words could be followed by real consequences, especially if Musk continues to provoke the president.

the Senate bill returns to the House for approval, Republicans are rushing to meet the July 4 deadline but face resistance even within their own ranks.