Trump-Musk fallout: How it will impact the president and the tycoon

For Trump, Musk has been a determined ally who could become a dogged opponent of his agenda. Musk also likely to suffer some blowback for his public attacks

It was always just a matter of time, insist some, after US President Donald Trump and billionaire tech mogul Elon Musk fell out in dramatic fashion over the past week. Their partnership played a critical part in powering the Republican Party and Trump to a dominant victory in the 2024 election, allowing both men to realise their ambitions to reshape American politics.

At the heart of their disagreement is Trump’s major tax cut bill, dubbed the “One Big Beautiful Bill.” (AFP)

At the heart of their disagreement is Trump’s major tax cut bill, dubbed the “One Big Beautiful Bill.” The White House has argued that the bill’s tax cuts will unleash unprecedented economic growth. However, according to the congressional budget office, the cuts could expand America’s fiscal deficit by a staggering $2.5 trillion over the next decade.

Musk has been clear that he opposes the bill, which is a centrepiece of Trump’s economic agenda. As head of the department of government efficiency (DOGE), Musk promised to cut the deficit by radically restructuring the federal government and cutting spending. Musk has vehemently opposed the One Big Beautiful Bill for running against his efforts at DOGE, since the bill could potentially expand the fiscal deficit and worsen America’s debt burden. The bill also cuts tax credits for electric vehicles, which could hit Musk’s Tesla. These disagreements spilled into a very public breakdown in relations between Trump and Musk.

The consequences for both men could be serious. For Trump, Musk has been a determined political ally who could become a dogged opponent of his agenda. The ‘One Big Beautiful Bill’ remains controversial within the Republican Party, and Musk’s criticism of it has given some Republicans — including, for example, Florida’s governor Ron DeSantis — some cover to criticise the bill. The legislation must now go to the Senate, and Musk’s opposition could make passing Trump’s signature financial bill harder.

More broadly, Musk has been a major financial engine powering Trump’s political campaigns. The South African-born entrepreneur gave an estimated $250 million to Trump’s 2024 presidential election campaign. Large sums were also expected to be allocated to the Republican Party for the 2026 midterm elections, where the party will face a difficult fight to hold on to control of America’s House of Representatives and the Senate.

Without Musk, things will be harder for the party. Musk’s ownership of X, previously Twitter, has also helped amplify Trump and his movement’s message to millions of users around the world.

However, Musk will likely suffer some blowback for his public attacks on Trump. Musk left the administration towards the end of May to refocus on his flagship businesses, including electric vehicle maker Tesla and space technology firm SpaceX. The latter business has received billions in government subsidies over the last few decades as it develops cutting-edge technology for cheaper space travel and satellite internet.

Following their fallout, Trump has threatened to eliminate government subsidies and contracts with Musk’s companies. This sent the stock price of Tesla spiralling downwards. Many investors had expected Musk to benefit from a closer relationship with the Trump administration, which now seems to be in jeopardy.

Musk is also likely to face significant political heat for his decision to attack Trump. Musk and his companies — especially Tesla — faced protests and even arson because of his work on DOGE. These political controversies could be further amplified, with even conservatives moving against Musk.