The conflict between Trump and Musk originated from their close collaboration since the 2024 U.S. election, which gradually broke down, evolving into a public standoff.

Here is the background of the events:

1. Background of cooperation (2024 election):

- Musk strongly supported Trump in the 2024 U.S. election, investing over $290 million, promoting on the X platform, creating a super PAC (America PAC), and organizing raffle events to help Trump win.

- Trump reciprocates by appointing Musk as head of the Department of Government Efficiency (DOGE), responsible for cutting government spending. The two had a close relationship at one point, with Musk often accompanying Trump, participating in White House meetings, and even engaging in talks with foreign leaders.

2. Initial cracks (early 2025):

- Policy differences: In early 2025, Musk's DOGE pushes for radical layoffs and budget cuts, triggering backlash within the government. Musk had multiple conflicts with Trump's cabinet members (such as Treasury Secretary Mnuchin, Secretary of State Rubio, and trade advisor Navarro), especially regarding the extent of layoffs and institutional management rights.

- Tariff disputes: In April, Trump promoted a high tariff policy (25% tariffs on countries like China, Canada, and Mexico), and Musk publicly criticized it, arguing that the trade war harms consumer interests and affects Tesla's stock price. Trump rejected his suggestion to withdraw the tariffs and publicly clashed with Navarro.

- Cabinet appointment friction: Candidates for IRS Commissioner and NASA Administrator recommended by Musk were replaced by Trump, causing dissatisfaction.

3. Conflict escalates (May-June 2025):

- Tax bill contradictions: In May, Musk publicly criticized the 'big and beautiful' tax bill supported by Trump, claiming it would increase the deficit by $3.8 trillion, contradicting DOGE's spending cut goals. Trump remained silent but felt frustrated by Musk's criticisms privately.

- Public confrontation: On June 4, Musk harshly criticized Trump on the X platform, calling him ungrateful and suggesting that without his support, Trump could not win. Trump retaliated, accusing Musk of suffering from 'mental derangement syndrome' and threatening to cancel the $38 billion government contracts for Tesla and SpaceX. Musk responded by stating that SpaceX would retire the Dragon spacecraft and suggested that Trump should be impeached.

- Epstein case allegations: On June 6, Musk hinted on the X platform that Trump was reluctant to release a list due to his involvement in the Epstein case, escalating the tensions further.

4. Musk's departure:

- On May 28, Musk announced his resignation as head of DOGE due to the 130-day term limit for special government employees, but stated he would continue to participate as an advisor. Trump presented him with the 'White House golden key' at a farewell ceremony, attempting to maintain a facade of harmony, but the differences had already become public.

Reasons

1. Policy ideology conflict:

- Trump advocates for 'America First', cherishing traditional industries, isolationism, and high tariffs, focusing on his voter base (working-class whites). Musk, on the other hand, tends towards globalization and technological innovation, supporting technology immigration and free trade, which contradicts Trump's protectionism.

- Musk's DOGE goal (cutting $2 trillion in spending) directly conflicts with Trump's tax bill (increasing the deficit), undermining Musk's reform achievements.

2. Personal character and power struggle:

- Both are known for their frankness; Musk's radical reforms anger Trump's cabinet, and Trump is reluctant to allow Musk to overly influence government decisions, fearing he could become the 'second president'.

- Musk felt that his efforts in DOGE were not sufficiently rewarded, becoming the 'scapegoat' for Trump's team, especially after his recommended candidates were rejected.

3. Commercial interests and political pressure:

- Musk's business empire (Tesla, SpaceX, X) suffers due to his political stance, with Tesla's stock price plummeting and brand reputation declining (ranking dropped to 95 in 2025). Trump's tariffs and subsidies further exacerbate his commercial dilemmas.

- Musk's relationship with China (Tesla's Shanghai factory) puts him under pressure from Trump's hardline policies toward China, with Trump even canceling his participation in briefings on military operations related to China.

4. External provocation:

- Democrats and some Republicans (like Nikki Haley) exacerbate Trump's dissatisfaction by flattering Musk (calling him the 'co-president').

- Inside Trump's team (such as Bannon and Navarro), there is dissatisfaction with Musk's advocacy for technology immigration, viewing it as a threat to American culture posed by the 'Silicon Valley elite'.

Impact on the crypto space

1. Market turbulence:

- Tesla's stock price plummets: On June 6, Trump threatens to cancel government contracts for Tesla and SpaceX, leading to a 15% drop in Tesla's value overnight, evaporating $130 billion in market capitalization.

- Cryptocurrency volatility: The conflict triggered market concerns about policy uncertainty, causing meme coins associated with the two, such as DOGE and TRUMP coins, to plummet. Posts on X showed that crypto investors lamented due to 'wallet emptying'.

- Macro-policy impacts: The split between Musk and Trump could lead to instability in the cryptocurrency regulatory environment. Trump had previously supported cryptocurrency development (such as proposing a Bitcoin strategic reserve), but his conflict with Musk could hinder policy advancement.

2. Declining investor confidence:

- As a significant influencer in the crypto space, Musk's political defeats and declining brand reputation weakened market confidence in related assets (such as DOGE).

- Trump's tariff and tax reduction policies may exacerbate inflation expectations, indirectly affecting the attractiveness of cryptocurrencies as safe-haven assets.

3. Long-term effects:

- If Musk reduces political involvement and focuses on the X platform and Tesla, he might continue to influence public opinion in the crypto space through social media, potentially having a negative impact on meme coins in the short term.

- If Trump continues to push for hardline economic policies, it could lead to increased market volatility, and the crypto space needs to be cautious of policy risks.

Summary

The conflict between Trump and Musk escalated from policy disagreements (tariffs, tax bills, technology immigration) to personal grievances (accusations of ingratitude, controversies surrounding Epstein), ultimately leading to a public split. The core reasons are their ideological conflicts, power struggles, and Musk's commercial interests being harmed. The cryptocurrency market experienced significant fluctuations as a result, with Tesla's stock price and related meme coins plummeting, leading to a loss of investor confidence.

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