Trump Threatens to Strip Musk's Federal Subsidies, Raises Stakes in Political Showdown

Jul, 2 2025

Trump Goes After Musk Over Federal Support

Sometimes politics throws out threats so bold they almost sound personal. That’s exactly what happened when Donald Trump publicly called out Elon Musk, accusing him of building his fortune on taxpayer money—and warning that the federal spigot could soon run dry. Trump’s message, shared on Truth Social, put Musk’s companies, Tesla and SpaceX, squarely in the crosshairs. In a clear escalation, Trump stated that if it weren’t for government support, Musk might as well ‘pack up and head back to South Africa’—despite Musk having been a US citizen for over two decades now.

What’s fueling this clash? It goes back to a Republican proposal called the ‘Big Beautiful Bill’—a highly debated piece of legislation that just axed support for electric vehicles. Musk didn’t mince words about it, calling the bill 'political suicide' and warning it would kill innovation in American industry. That hit a nerve. Trump doubled down, accusing Musk’s ventures of feasting on federal handouts and hinting that contracts tied to SpaceX’s satellite internet, Starlink, could be on the chopping block. The message was clear: Stop biting the hand that’s feeding you.

The Stakes for Musk and the Political Backlash

This isn’t just a war of words. Tesla and SpaceX have long played a central role in America’s pivot toward renewable energy and private space exploration. Both companies have benefited from billions in federal tax breaks, grants, and government contracts. These deals have put SpaceX rockets at the heart of NASA’s plans and made Teslas a poster child for green tech. But pulling the plug on these subsidies could cause real pain—not just for Musk but for an energy and tech sector that relies heavily on such support to compete globally.

Trump’s threats aren’t happening in a vacuum. They signal a divide opening up in what was once a mutually beneficial relationship between high-profile business leaders and the political right. Once, Trump lauded Musk’s vision, famously welcoming his business investments in the US. Now, with Musk openly challenging party policies and floating the idea of launching a new political movement, all bets are off. Trump’s warning—'don't play games with me'—isn’t likely to shrink this rift.

Behind the fireworks, the bigger issue looms: What happens when government support for transformative tech becomes a political football? With the Trump-Musk feud heating up, there's clearly more at stake than just subsidies—there’s the direction of America’s innovation economy, and who gets to decide its future.