Tesla’s Historic Loss: Tesla shares dropped 14% on June 5, 2025, erasing $150 billion in market value, the largest single-day decline in the company’s history.
Trump’s Threat: President Trump threatened to terminate government subsidies and contracts for Musk’s companies, including Tesla and SpaceX, over a dispute on a tax bill.
Market Ripple Effects: The Nasdaq 100 fell nearly 1%, and the S&P 500 declined as investors reacted to the feud and Trump’s tariff policies.
Musk’s Counter: Musk claimed Trump’s tariffs would cause a recession in late 2025 and threatened to decommission SpaceX’s Dragon spacecraft.
Slight Recovery: Tesla shares rebounded by 5.6% in Frankfurt trading on June 6, 2025, following reports of a White House call to ease tensions.
On June 5, 2025, a dramatic public feud between tech billionaire Elon Musk and U.S. President Donald Trump sent shockwaves through global financial markets, with Tesla bearing the brunt of the fallout. The electric vehicle (EV) giant saw its shares plummet 14%, wiping out approximately $150 billion in market value—the largest single-day loss in Tesla’s history. This clash not only rattled investors but also highlighted the fragility of markets in the face of political and economic uncertainty, a concern that resonates deeply in the world of decentralized finance (DeFi), where stability is key to growth.
The feud erupted when Trump threatened to terminate government subsidies and contracts for Musk’s companies, including Tesla and SpaceX, over disagreements on a major tax bill. “The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts,” Trump posted on Truth Social. This statement came as Musk vocally opposed Trump’s budget bill, which proposed cuts to the $7,500 federal tax credit for EV purchases—a policy that has supported Tesla’s growth alongside state-level subsidies totaling $11.4 billion.
In light of the President’s statement about cancellation of my government contracts, @SpaceX will begin decommissioning its Dragon spacecraft immediately pic.twitter.com/NG9sijjkgW
— Elon Musk (@elonmusk) June 5, 2025
Musk, who spent nearly $300 million backing Trump and other Republicans in the 2024 election, fired back on X, stating, “Without me, Trump would have lost the election”. He also warned that Trump’s aggressive tariff policies, which had already caused market turmoil earlier in 2025, would “cause a recession in the second half of this year”. These tariffs, announced in early 2025, had previously led to a $536 billion collective loss for the world’s 500 richest people, with Musk personally losing $130 billion by April 2025.
The broader market felt the heat as well. The Nasdaq 100 dropped nearly 1%, and the S&P 500 declined as investors grappled with the uncertainty. The volatility underscored the interconnectedness of traditional markets and DeFi ecosystems, where assets like Bitcoin (BTC), Ethereum (ETH), and Dogecoin (DOGE) often react sharply to macroeconomic shifts.
Musk escalated the conflict by threatening to decommission SpaceX’s Dragon spacecraft, the only U.S. spacecraft currently capable of sending astronauts to the International Space Station (ISS). “In light of the President’s statement about cancellation of my government contracts, @SpaceX will begin decommissioning its Dragon spacecraft immediately,” Musk posted on X. This move could disrupt NASA’s operations, as SpaceX has secured $22 billion in federal spending and $3.8 billion in contracts in 2024 alone.
Despite the sharp decline, Tesla shares saw a slight recovery of 5.6% in Frankfurt trading on June 6, 2025, following reports of a White House call aimed at easing tensions between Musk and Trump. However, the ongoing uncertainty continues to weigh on investor sentiment, with fears of a potential recession and weakened economic growth lingering.
Market Impact in Numbers
Index/Stock Change on June 5, 2025 Notes Tesla (TSLA) -14% Lost $150 billion in market value Nasdaq 100 -0.9% Reflects broader market concerns S&P 500 Declined Specific percentage not reported Tesla (Frankfurt) +5.6% (June 6) Post-White House call recovery
The feud also raises questions about the future of government support for green energy and space exploration. Tesla has historically benefited from federal incentives, while SpaceX’s role in the U.S. space program is deemed critical. “It will be some time before any of the company’s competitors will be able to take up the slack,” said Dan Grazier, a senior fellow at the Stimson Center, highlighting SpaceX’s indispensable role.
For DeFi enthusiasts, this saga serves as a reminder of how traditional market volatility can ripple into the crypto space. As centralized policies clash with innovation-driven businesses, the stability of decentralized assets becomes even more crucial. While Musk and Trump’s relationship remains uncertain, the financial world—and the DeFi community—will be watching closely.
Key Concepts
EV Tax Credits : A $7,500 federal incentive for electric vehicle buyers, aimed at boosting green energy adoption. Trump’s bill threatens to end this, impacting Tesla’s sales.
Tariffs : Taxes on imported goods, like Trump’s 2025 policies, which raise costs for companies like Tesla and risk broader economic downturns.
SpaceX’s Dragon : The only U.S. spacecraft currently capable of ferrying astronauts to the ISS, making Musk’s decommissioning threat a significant concern for NASA.
Feud Impact on Tesla’s Stock : Tesla’s stock plummeted 14% on June 5, 2025, losing $150 billion in market value due to the Musk-Trump feud.
Government Subsidies and Contracts : Trump’s threat to terminate government subsidies and contracts for Tesla and SpaceX added to market uncertainty.
Political Influence on Business : The Musk-Trump feud underscores the impact of political relationships on corporate performance and market stability.
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