A once-close alliance between Donald Trump and Elon Musk has spectacularly imploded, with threats, insults, and policy rifts spilling across social media and triggering a financial rout for Tesla.

The feud erupted after Musk denounced Trump’s flagship tax and spending bill as a “disgusting abomination,” warning it would deepen the $36.2 trillion federal debt. While Trump initially stayed silent, he lashed out Thursday from the Oval Office, saying he was “very disappointed in Elon” and calling him “crazy”.

Musk responded in real-time on his X platform, claiming Trump “would have lost” the 2024 election without his $300 million backing. He further accused the president of ingratitude and suggested Trump’s tariffs would push the U.S. into recession.

Threats Escalate to Federal Contracts and Space Missions

Trump quickly escalated by threatening to cancel all federal contracts with Musk’s companies: “The easiest way to save money is to terminate Elon’s governmental subsidies,” he posted on Truth Social. This would hit Tesla, SpaceX, and Starlink—key players in U.S. defense and space infrastructure.

In response, Musk announced the immediate decommissioning of the Dragon spacecraft, which supports NASA’s ISS operations. Although he later reversed the decision following public pressure, the threat sent shockwaves through U.S. aerospace circles.

Political and Market Repercussions

Musk also floated the idea of founding a new political party for “the 80% in the middle,” intensifying speculation about his future political ambitions. His call for Trump’s impeachment came shortly after Tesla shares plummeted 14.3%, wiping out $150 billion in market value—the worst single-day loss in company history.

Republicans, already grappling with internal divisions over Trump’s spending bill, now face an influential tech mogul turned adversary. Trump’s remark that Musk was upset about losing influence inside the White House fueled further backlash.

From Adviser to Adversary

Just a week earlier, the two had stood side by side in the Oval Office. Musk, who served as head of the Department of Government Efficiency, had pushed for deep budget cuts and was a fixture in Trump’s second-term inner circle. Now, their public spat marks Trump’s first major fallout with a top ally since returning to office.

Background Context:
The Trump-Musk relationship began as a strategic alliance. Musk helped bring tech donor networks and libertarian support into Trump’s orbit. But the conflict over Trump’s “big, beautiful bill” has now exposed cracks within Republican leadership. While Trump aims to strip EV tax credits, Musk has criticized the bill’s hidden subsidies for oil and gas—creating ideological and financial fault lines too wide to ignore.