A blazing public argument has broken out between President Donald Trump and tech tycoon Elon Musk.
Musk has sharply criticized Trump’s controversial $1.7 trillion tax-cut and spending package. A policy disagreement that started with Musk calling Trump and his policies malaise has become a political and financial standoff with serious ramifications for both the markets and Musk’s business empire. The clash, in short, is now a high-stakes game.
Only a week after Musk officially resigned from his role as an economic advisor to the White House, the two individuals find themselves on opposite sides of a bitter dispute. Not only does this signals some increasing tensions within the U.S. business-political landscape; it also has investors rattled and shaken confidence that the economy is or will be stable.
A Spending Bill Sparks a Political Firestorm
Elon Musk’s feud with President Joe Biden and his administration flared up in late 2021 when Musk blasted the new $1.7 trillion tax and spending proposal on social media and in interviews. Musk said it and the burgeoning national debt (more than $36 trillion and counting) were dangerous. He called the 1.7 (actually, it was 1.68) written into the proposal a kind of “flubber” (as in the movie starring Robin Williams) that could not possibly create jobs.
No Americans living today could be sure that the U.S. population in, say, 2060 could afford to pay back anything like what was being proposed.
Musk said, “The government can’t keep writing blank checks with taxpayer money. This is not sustainable, and it sends a terrible signal to the markets.”
At first, President Trump held back from a direct response. Yet, he later commented on Musk’s remarks during a White House press briefing. In the briefing, Trump said he was ‘deeply disappointed’ by Musk’s public position.
The president went on to call Musk’s comments ‘reckless and unpatriotic,’ especially given the context of Musk’s prior advisory role and Tesla’s reliance on federal financing.
SpaceX doesn’t operate in a vacuum, either; it requires federal funds, contracts, and a partnership with NASA.
Federal Threats and Market Fallout
The dispute intensified considerably when President Trump indicated that he might retaliate against Musk’s companies. In effect, he threatened to take a look at all the federal contracts and subsidies that are in favor of Tesla and SpaceX. These relationships with the government are very important to the development of both these companies. They range from tax credits that help Tesla produce clean energy to certainly very important contracts that SpaceX and Tesla have with NASA and the Department of Defense.
Remarks by Trump shook Wall Street to its core. The stock of Tesla fell like a stone, plunging 14.3% in a single day’s trading, its sharpest one-day drop in history. In the wake of those comments, the selloff wiped out nearly $150 billion in market capitalization, sending investors to their fainting couches and causing even some of the ‘Long Ts’ (those who believe in Tesla’s long-term future) to reassess their confidence.
The broad market felt the turbulence, with the S&P 500 slipping on the day and tech and energy sectors taking the law of gravity to heart. As if to add to the uncertainty, cryptocurrency markets experienced a jolt, with Bitcoin and Ethereum dropping suddenly and briefly by several percentage points as investors and traders soaked up the moment and battened down for whatever potential regulatory hail might be coming.
If the impasse between Trump and Musk continues to heat up, market analysts say, it would likely provoke even more investors to bail out of the sectors that the federal government tends to influence most, notably green energy and the aerospace sector.
Broader Implications and What Comes Next
The clash between Trump and Musk carries ramifications that extend well beyond the immediate financial consequences. It brings to light deeper fault lines between the federal government and the private sector. Musk has long portrayed himself as an independent thinker and contrarian, but there’s no denying that his companies have long enjoyed the kinds of public funding and federal support that many tech entrepreneurs can only dream about. With Trump positioning his administration against Musk, it’s hard to avoid the conclusion that the future of those Musk-Trump area collaborations is now rather cloudy.
Political experts say this direct confrontation could have a major upside or downside—meaning significant implications—for the upcoming election cycle. For one, Musk is a loud, large presence online, with a following that’s arguably the most potent outside of Trump himself. So there’s that. Meanwhile, for Trump, my personal feeling is this could work out as an image-builder/badass move, showing him to be someone who’s not afraid to take on one of America’s largest, most influential entrepreneurial figures.
At present, the situation is still very uncertain. Everyone, from investors and policymakers to the general public, is keeping a close watch to see if the tensions will deescalate. The other possibility is that this well-publicized conflict will keep on sending shockwaves through financial markets and political corridors.
As the fallout unfolds, one thing is clear: this is no longer just a policy disagreement. It’s a full-scale battle between the White House and one of the most powerful figures in global business—one with stakes that reach far beyond Capitol Hill or Silicon Valley.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
Follow us on Twitter @themerklehash to stay updated with the latest Crypto, NFT, AI, Cybersecurity, and Metaverse news!
The post Trump and Musk Clash Over Spending Bill as Tesla Stock Suffers Historic Plunge appeared first on The Merkle News.
