Trump-Musk Feud Escalates: Subsidies, AI Contracts, and Political Fallout

Trump says he wants Elon Musk to 'THRIVE' after threatening his subsidies

Elon Musk faces backlash after Grok AI made antisemitic remarks. Critics say Musk's tweaks to the model steer it from fact-based responses. WASHINGTON - President Donald Trump says he does not want to ruin billionaire advisor Elon Musk's businesses by taking away federal subsidies after recently threatening the former head of the Department of Government Efficiency. "Everyone is stating that I will destroy Elon's companies by taking away some, if not all, of the large scale subsidies he receives from the U.S. Government," Trump wrote in a July 24 Truth Social post. "This is not so! I want Elon, and all businesses within our Country, to THRIVE, in fact, THRIVE like never before! The better they do, the better the USA does, and that's good for all of us. We are setting records every day, and I want to keep it that way!" Musk's companies have benefited from billions of dollars in U.S. government contracts over the past two decades, including SpaceX through its relationships with the Department of Defense and NASA. In all, Musk and his businesses have received at least $38 billion in government contracts, loans, subsidies and tax credits, often at critical moments, a Washington Post analysis found. Trump's latest remarks come after White House Press Secretary Karoline Leavitt said in a press briefing on July 23 that she does not think the president supports federal agencies contracting with Musk's artificial intelligence company, xAI, which developed the chatbot Grok. xAI recently announced a $200 million contract with the Department of Defense. The two men had a dramatic falling out over Trump's signature tax and domestic policy law, with Musk blasting it as a "disgusting abomination" that would only add to the growing deficit. In July, Trump threatened to have DOGE review the billions of dollars' worth of contracts that Musk's companies receive. "Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa," Trump wrote in a 12:44 a.m. July 1 post on Truth Social. "No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE. Perhaps we should have DOGE take a good, hard, look at this? BIG MONEY TO BE SAVED!!!" Musk, who was co-leader of DOGE, responded shortly afterward, saying, "I am literally saying CUT IT ALL. Now." Musk had warned Tesla investors on July 23 that U.S. government cuts in support for electric vehicle makers could lead to a "few rough quarters" for the company.

Trump denies wanting to 'destroy' Musk's companies

President Trump on Thursday denied wanting to harm tech billionaire Elon Musk's businesses, amid questions over if he supports federal agencies working with the Tesla CEO's companies. "Everyone is stating that I will destroy Elon's companies by taking away some, if not all, of the large scale subsidies he receives from the U.S. Government. This is not so!" Trump wrote on Truth Social. He continued, "I want Elon, and all businesses within our Country, to THRIVE, in fact, THRIVE like never before! The better they do, the better the USA does, and that's good for all of us. We are setting records every day, and I want to keep it that way!" The president's comments come a day after White House press secretary Karoline Leavitt said she does not think Trump supports federal agencies contracting with Musk's artificial intelligence (AI) company, xAI. When asked if Trump would then want the government to cancel a recently announced contract with the venture, Leavitt said she would talk to the president about it. xAI scored a contract for up to $200 million with the Department of Defense, alongside Anthropic, Google and OpenAI, last week. This week, xAI unveiled a suite of products for U.S. government customers, which it refers to as Grok for Government. Trump has previously threatened to cancel federal contracts with Musk's businesses, such as SpaceX, saying in June, "The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts." Trump and Musk have been in a bitter feud since their falling out at the end of May, around when the tech guru's role as a special government employee ended and while the Tesla chief was publicly critical of the "big, beautiful" spending and tax bill.

"This is not so!" Says President Trump About Destroying Elon Musk's Companies & Adds "I want Elon" To Thrive In America

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. President Trump, in a post on Truth Social moments back, struck a reconciliatory tone with one of his biggest former supporters, Tesla and SpaceX CEO Elon Musk. While Trump had kept an open stance about deporting Musk, this time, he refuted the belief that he was looking to harm Musk's companies by investigating their government contracts. The President's latest remarks about Musk came after reports suggested that the government had investigated SpaceX's contracts and after Musk refrained from targeting him on social media. President Trump and Elon Musk, who at one point in time was one of Trump's biggest supporters, had a falling out in a spectacular fashion earlier this year over Trump's Big Beautiful Bill. The pair disagreed whether the legislation would significantly impact the US deficit, as while Musk argued that it would enlarge the deficit, Trump dismissed his concerns and asserted that the Tesla CEO did not want his EV subsidies to end. Soon afterward, Trump also remained open to deporting Musk. When asked in an interview earlier this month about whether he would consider deporting the Tesla CEO, Trump said that he would "have to take a look" as his government might have to "put DOGE on Elon." The President then reminded reporters that DOGE, Musk's government efficiency department, was the "monster that might have to go back and eat Elon. Wouldn't that be terrible? He gets a lot of subsidies." Following the widely reported fallout between America's most powerful man and its richest, media reports surfaced and claimed that the US government was looking into Musk's government contracts. While Tesla relies primarily on electric vehicle sales to generate revenue, SpaceX does generate sizable revenue from its work with NASA and the Pentagon. Musk's space company is the only American firm capable of sending crewed missions to the International Space Station (ISS) from US soil, and it regularly launches satellites for NASA and the Defense Department. However, in a post on Truth Social earlier today, the President refuted claims that he was looking to harm Musk's companies. "Everyone is stating that I will destroy Elon's companies by taking away some, if not all, of the large-scale subsidies he receives from the U.S. Government," wrote Trump. "This is not so!" he asserted and added that "I want Elon, and all businesses within our Country, to THRIVE." Not only does the President want Musk's companies to thrive, but he wants to them to succeed "like never before!" Trump believes that the success of SpaceX, Tesla and other Musk ventures is great for America. Apart from his rocket and car companies, Musk's xAI also competes at the level with big technology firms and is building one of the largest AI GPU clusters in America. The executive recently announced that xAI would use as many as 550,000 NVIDIA Blackwell AI GPUs for its computational needs, with power requirements equalling 35 nuclear power plants.

Elon Musk hits back at Trump after president said he didn't want to...

Elon Musk hit back at President Trump's claim that he didn't want to strip the mogul's companies of his government subisidies. Trump seemingly extended an olive branch after the public falling out between the two by denying reports that he had it out for Musk. "Everyone is stating that I will destroy Elon's companies by taking away some, if not all, of the large scale subsidies he receives from the U.S. Government. This is not so!" Trump wrote on Truth Social on Thursday. "I want Elon, and all businesses within our Country, to THRIVE, in fact, THRIVE like never before!" Shortly afterward, Musk posted a pointed rebuttal on X, writing: "The 'subsidies' he's talking about simply do not exist." He added that Trump "has already removed or put an expiry date on all sustainable energy support while leaving massive oil & gas subsidies untouched." "SpaceX won the NASA contracts by doing a better job for less money. Moving those contracts to other aerospace companies would leave astronauts stranded and taxpayers on the hook for twice as much!" Musk wrote. Last week, the Wall Street Journal reported that the Trump administration initiated a review of government contracts with Musk's companies -- though officials reportedly determined that canceling those deals were not feasible due to their importance to national security. Government support has been instrumental in the growth and scale of Musk's ventures. His companies have secured over $38 billion in government funding since 2007, according to public records and contract data, with nearly two-thirds of that amount awarded in the past five years. The support spans federal, state, and local levels and includes contracts, subsidies, tax incentives and regulatory advantages. SpaceX, Musk's aerospace firm, is the largest recipient, benefiting from billions in NASA and Department of Defense contracts. The US Space Force recently awarded SpaceX a $5.9 billion contract for rocket launches and satellite operations through 2029. NASA has awarded SpaceX approximately $15 billion in contracts for cargo and crewed missions as of 2025. Starlink, the satellite internet provider under SpaceX, secured $6 billion in federal contracts between 2022 and 2023 to expand broadband access for rural and military users. Tesla has received more than $11 billion in regulatory credits and government incentives. The $7,500 federal electric vehicle tax credit alone is worth an estimated $1.2 billion annually to Tesla as of 2025. In addition, state and local governments have contributed at least $1.5 billion in grants and tax breaks for Tesla factories and battery development, primarily in California, Nevada and Texas. xAI, Musk's artificial intelligence company, was awarded a $200 million Department of Defense contract in July 2025 to develop AI technologies for national security and scientific use. Musk and Trump's alliance unraveled after the Tesla CEO criticized Trump's sweeping tax and spending law, known as the "Big Beautiful Bill," calling it a "disgusting abomination" and warning it would exacerbate the national debt. Last month, Trump expressed disappointment and suggested reconsidering government contracts for Musk's companies. Musk fired back on social media, referencing allegations linked to Trump's appearance in the Jeffrey Epstein files. The feud spiraled from there, with Trump publicly attacking Musk's character and Musk floating the idea of forming a new political party.