Trump suggests to cut Musk's federal contracts, subsidies after public spat

US President Donald Trump and Tesla CEO Elon Musk's spat intensified on Thursday as Trump suggested slashing the federal government contracts and subsidies given to Musk's companies, Tesla and SpaceX.

The discord stems from Musk's scathing criticism of the new Republican tax bill, prompting a pointed retort from President Trump.

Cutting federal contracts

Musk promptly wrote in a social media post, "Go ahead, make my day".

Tesla CEO then claimed Trump's name appears in the Epstein files.

Musk was reffering to the files related to late New York Financier Jeffrey Epstein who was accused of sex trafficking underage girls.

Epstein later died by suicide while being detained at a federal prison.

Musk's Tesla enjoys electric vehicle subsidies from the federal government. SpaceX also receives contracts from NASA and the Pentagon.

SpaceX secured $3.8 billion in federal contracts in the 2024 fiscal year.

Certain Tesla vehicles are also eligible for a tax credit of up to $7,500.

The new tax bill would eliminate the $7,500 tax credit for Tesla vehicles in 2025, seven years ahead of schedule.

According to JP Morgan analysts, this would cause a $1.2 billion hit to Tesla's full-year profits.

Bloomberg Government data puts the total revenue for SpaceX and Tesla from federal unclassified contracts since fiscal year 2000 at $22.5 billion.

The two formal allies' public spat began as Musk criticised the “big, beautiful bill,” as termed by Trump.

The world's richest man said the tax bill would add to the federal deficit and undo all the work done by the Department of Government Efficiency (DOGE).

Trump earlier told the reporters that he was disappointed with Musk's criticism of the tax bill, and said Musk knew "the inner workings of the bill than anybody sitting here".

According to Trump, Musk had no problem with the bill and only developed opposition after learning EV tax cut mandate.

Musk responded to this claim through an X (formerly known as Twitter) post.

Musk also said "Such ingratitude", saying that without him Republicans and Trump would have lost the 2024 election with Democrats controlling the house and Republicans ruling the Senate.

In a X poll, Musk asked the possibility of creating a new political party that "represents the 80% in the middle".

Musk also denied the accusation about EV tax mandate cut, saying he didn't mind the tax cut and added"ditch the MOUNTAIN of DISGUSTING PORK in the bill.”

The Tesla and Space X CEO left the federal government last week, leaving his role at the DOGE after a four-month stint.

Tesla shares were down 14% after the former allies traded barbs against each other.