Trump Threatens Musk's Federal Contracts Amid Tax Dispute Tesla Shares Fall

President Donald Trump has intensified his public dispute with Elon Musk, the CEO of Tesla and SpaceX, by threatening to revoke billions of dollars in federal contracts and tax incentives. The conflict began after Musk publicly criticized Trump's major tax legislation, leading to a series of heated exchanges on social media.

Trump, who had previously remained silent on Musk's criticisms, broke his silence during a White House meeting. He expressed disappointment in Musk and suggested that the U.S. government could use its power to financially harm Musk's companies, Starlink and SpaceX. Musk responded defiantly on his social media platform, X, challenging Trump to follow through on his threats.

The rift between the two billionaires has deepened over the past week, with Musk accusing Trump of ingratitude and claiming that his support was crucial to Trump's election victory. Trump, in turn, has criticized Musk for his public stance against the tax legislation and for promoting Jared Isaacman to run NASA, a move that Trump ultimately withdrew.

The feud has also had financial implications for Musk, with Tesla shares falling after Trump's comments. Musk has continued to criticize the tax legislation, calling it a "disgusting abomination" and warning that it will increase the federal deficit. Trump, however, has dismissed Musk's concerns, stating that the bill was never shown to him and was passed too quickly for anyone to read it thoroughly.

The relationship between Trump and Musk, which had been close and supportive, has now turned hostile. Trump has suggested that Musk's departure from his administration has left him feeling disillusioned and that he may have developed a form of "Trump derangement syndrome." Musk, for his part, has continued to use social media to criticize Trump and his policies, sharing posts from Trump's past that contradict his current stance on spending.

In addition to the feud with Musk, Trump has hinted at an upcoming appointment for the Federal Reserve Chair. The potential appointment of Kevin Warsh as the next Federal Reserve Chair under a second Trump administration has sent ripples through financial markets. Warsh, a former Fed governor, is known for his hawkish views on monetary policy and has been a vocal critic of the Fed's current approach to inflation. His appointment could signal a shift in the Fed's policy direction, with a greater focus on controlling inflation and reducing the size of the Fed's balance sheet.

The appointment of a new Federal Reserve Chair is a significant event that could have far-reaching implications for the economy. Warsh's potential appointment has raised questions about the future of monetary policy and the Fed's role in managing the economy. While some analysts have praised Warsh's qualifications and experience, others have expressed concern about his hawkish views and the potential impact on financial markets.

The feud between Trump and Musk, as well as the potential appointment of a new Federal Reserve Chair, highlights the ongoing tensions and uncertainties in the political and economic landscape. As the situation continues to unfold, it remains to be seen how these developments will shape the future of the economy and the relationship between the government and the private sector.