Trump reaffirms federal subsidies for Musk’s companies amid escalating tensions

Trump has reaffirmed his commitment to maintaining federal subsidies for Elon Musk’s companies despite a public feud marked by escalating tensions. The , who previously threatened to terminate Musk’s government contracts and subsidies, clarified on Truth Social that he has no plans to cut off federal support. “I want Elon, and all businesses within our Country, to THRIVE,” he wrote, emphasizing that the success of American businesses aligns with national interests [1]. This statement comes after weeks of speculation fueled by Trump’s earlier posts suggesting Musk’s companies would lose funding unless they “head back home to South Africa” [2].

The dispute intensified following Musk’s public criticism of Trump’s legislative agenda, including his derogatory remarks about the One Big Beautiful Bill as a “disgusting abomination.” Musk later issued an apology for his comments, but Trump’s rhetoric remained combative, hinting at the Department of Justice’s potential review of Musk’s ventures via the xAI project [3]. Meanwhile, Musk’s recent $200 million contract with the Department of Defense—part of a broader $200 million AI initiative involving competitors like Google and OpenAI—has deepened his entanglement with federal programs amid political uncertainty [4].

White House press secretary Karoline Leavitt added complexity to the situation by suggesting that Trump does not fully endorse Musk’s AI projects. When asked about potential cancellations of deals involving xAI’s Grok chatbot, Leavitt stated she “doesn’t think” federal agencies would terminate contracts with Musk’s ventures but offered to “talk to him” about the matter [5]. This ambiguity highlights the White House’s cautious stance, as Musk’s Starlink and Tesla contracts remain intact, and no other AI firms have faced similar scrutiny [6].

The feud’s financial repercussions are evident. Tesla shares plummeted after Musk accused Trump of “bankrupting our country” in a press briefing, exacerbating concerns over the automaker’s profitability amid Trump’s tariffs and expiring EV incentives [7]. Musk acknowledged Tesla could face “a few rough quarters” but maintained confidence in its long-term prospects. Analysts note that Trump’s refusal to weaponize subsidies reflects a strategic shift: rather than direct financial pressure, the administration may now prioritize regulatory measures, such as vetting AI models for “ideological bias,” to influence Musk’s operations [8].

The standoff underscores broader tensions between Trump’s vision for tech policy and Silicon Valley’s independence. By framing his approach as a defense of national loyalty, Trump aims to assert control over AI governance while avoiding overt confrontation with a high-profile billionaire. Musk, in turn, has leveraged the dispute to reinforce his narrative of innovation versus political interference, though his public defiance has also heightened risks. The White House’s inconsistent messaging—alternately threatening and affirming subsidies—has created uncertainty, with stakeholders bracing for further volatility as the 2024 election cycle approaches.

Sources:

[1] [Trump says he won’t cut Elon Musk’s federal subsidies](https://www.cryptopolitan.com/trump-wont-cut-elon-musks-federal-subsidies/)

[2] [Trump Threatens Musk: Deportation & Subsidy Cuts](https://www.youtube.com/watch?v=6khKam0d82U)

[3] [White House suggests Trump doesn’t want Elon Musk’s xAI](https://www.yahoo.com/news/articles/white-house-suggests-trump-doesnt-205522965.html)

[4] [Tesla shares plummet after Elon Musk reignites feud with Trump](https://www.thecooldown.com/green-business/tesla-stock-elon-musk-donald-trump-fallout/)

[5] [Musk: “A few rough quarters” ahead for Tesla](https://subscriber.politicopro.com/article/eenews/2025/07/24/musk-a-few-rough-quarters-ahead-for-tesla-00473314)

[6] [Vetting of “ideological bias” in AI models in new Trump plan](https://fedscoop.com/vetting-of-ideological-bias-in-ai-models-in-new-trump-plan-stirs-confusion/)

[7] [Tesla profit plunges in latest quarter as Musk’s turn to AI](https://www.arabnews.com/node/2609214/world)

[8] [Turns out Elon was telling the truth!](https://www.facebook.com/groups/247964452207480/posts/2555681161435786/)