Trump targets Musk's federal subsidies, contracts as feud grows

Akayla Gardner, Josh Wingrove and Kate Sullivan, Bloomberg News on Jun 5, 2025

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WASHINGTON — President Donald Trump proposed ending Elon Musk’s government contracts and subsidies, escalating the feud between the two former allies.

“The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts. I was always surprised that Biden didn’t do it!” Trump posted on social media Thursday.

Trump’s threat strikes at a main source of the billionaire’s wealth. Musk’s Tesla Inc. and Space Exploration Technologies Corp. have benefited from federal contracts and subsidies.

Musk and Trump spent Thursday trading insults after the president’s onetime adviser attacked the Republican tax policy bill at the center of his agenda.

“Elon was ‘wearing thin,’ I asked him to leave, I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!,” Trump posted.

Trump told reporters earlier that he was “disappointed” by Musk’s criticisms, saying the bill’s cuts to electric vehicle tax credits drove his opposition.

In a remarkable scene, Musk responded in real time, posting rebuttals on social media as the president spoke.

“Such ingratitude,” Musk posted, citing his financial support for Republicans during the 2024 election. “Without me, Trump would have lost the election, Dems would control the House and the Republicans would be 51-49 in the Senate.”

Tesla shares fell as much as 6% to touch a session low as Musk and Trump traded barbs.

“I’m very disappointed in Elon. I’ve helped Elon a lot,” Trump said earlier during an Oval Office meeting with German Chancellor Friedrich Merz. “He said the most beautiful things about me, and he hasn’t said bad about me personally, but I’m sure that’ll be next.”

Musk denied that motivation in a post on X, saying he was fine with reducing the EV credits if lawmakers “ditch the MOUNTAIN of DISGUSTING PORK in the bill.”

The back-and-forth is the freshest sign of distance between the two formerly close allies after Musk’s exit from the ranks of Trump’s aides.

Since leaving government, Musk has criticized the Republican package — Trump’s “one big beautiful bill,” as he calls it — because it is forecast to add to the U.S. budget deficit.

The legislation would eliminate a credit worth as much as $7,500 for buyers of some Tesla models and other electric vehicles by the end of 2025, seven years ahead of schedule. That would cause a roughly $1.2 billion hit to Tesla’s full-year profit, according to JPMorgan analysts.

“I’m very disappointed because Elon knew the inner workings of this bill better than almost anybody sitting here,” the president said. “All of the sudden, he had a problem and he only developed a problem when he found out we’re going to have to the cut the EV mandate.”

Musk, in another retort, said he was not aware of the details. “This bill was never shown to me even once and was passed in the dead of night so fast that almost no one in Congress could even read it!” he said in a post on X, formerly known as Twitter before he purchased it.

Trump also said his initial pick to lead the National Aeronautics and Space Administration, Jared Isaacman, was a barrier, in part because of his past supports for Democrats. Isaacman was an associate of Musk. “I didn’t think it was appropriate,” Trump said. “He wanted that person, a certain person, and we said no.”

The exchange is the latest in what has been a relatively swift break with Musk, who served as a "special government employee" overseeing cost-cutting efforts before leaving.

Just last Friday, Trump staged an event for Musk in the Oval Office, celebrating his tenure and thanking him.

Trump recalled that in Thursday’s meeting with Merz, noting that Musk was sporting a black eye at the time.

“I said do you want a little makeup? We’ll get you a little makeup. but he said ‘no, I don’t think so,’ which is interesting and very nice,” Trump said Thursday. “He wants to be who he is.”

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(With assistance from Richard Clough.)