Introduction

In a surprising reversal this week, former U.S. President Donald Trump publicly denied he intends to slash federal subsidies or contracts to Elon Musk’s businesses. With their relationship strained amid political crossings and public criticism, Trump insisted he still supports Musk—and all American companies—to “thrive like never before.”

From Threats to Praise: Trump’s Public Turnaround

On July 24, 2025, Trump posted on Truth Social:

“Everyone is stating that I will destroy Elon’s companies by taking away some, if not all, of the large scale subsidies he receives … 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…”

This came after his earlier June warnings that cutting Musk’s subsidies could save the federal budget “billions and billions” of dollars .

 Context: The Broken Alliance

Musk, once a major Trump supporter who led the so-called Department of Government Efficiency (DOGE) and poured nearly $250 million into Trump’s reelection, has since criticized the president’s signature legislation, calling the One Big Beautiful Bill a “disgusting abomination”.

Trump, in turn, publicly questioned Musk’s dependence on subsidies, claiming Musk “may get more subsidy than any human being in history” and floated using DOGE to audit or claw back Musk-related contracts .

 Why the Change in Tone?

Federal pushback. A government review reportedly concluded Musk’s companies—SpaceX, Tesla, Starlink, and xAI—have critical roles in U.S. infrastructure, space, and AI projects, making abrupt cuts impractical .

Recent contract wins. Notably, Musk’s xAI secured a $200 million Department of Defense contract, signaling ongoing government investment in his ventures

 Musk Responds: A One‑Word Relief

Musk publicly reacted to Trump’s change of heart with a single word: “Phew.” The response followed Trump’s Truth Social post and suggests relief at reportedly averting major subsidy cuts .

Fallout: Markets and Musk’s Companies Feel the Wave

Despite Trump’s reassurance, Tesla shares slid 8% following the market’s reaction to uncertainty around EV subsidies and broader anti-EV rhetoric from the administration .

Tesla is facing pressure from both tougher policy headwinds—including the phase-out of the $7,500 federal EV tax credit—and investor concern over waning margins and demand forecasts .

 Musk’s Own Stance on Subsidies

Interestingly, Musk has long publicly opposed car-specific tax credits, favoring a carbon tax over direct government incentives, though Tesla has undeniably benefited from billions in regulatory credits and contracts .

Musk has argued that eliminating EV subsidies could level the playing field for renewable energy broadly—including wind, solar, and battery producers

 What’s at Stake Moving Forward

🎯 Government Contracts

SpaceX, Starlink, and xAI represent significant U.S. strategic assets. Undermining these contracts could disrupt everything from satellite access to national defense systems.

💡 Electric Vehicle Market

The EV tax credit phase-out threatens consumer adoption as demand slows. Tesla executives have warned investors of rough quarters as policy support dwindles .

🎭 Political Symbolism

Trump’s swing from audit threats to public encouragement illustrates the push-pull between populist posturing and pragmatic governance when major employers and innovators are involved.

Conclusion

Despite escalating tensions, Trump has unequivocally denied any intention to dismantle Elon Musk’s federal support—insisting that America’s prosperity relies on the growth of innovative companies. Musk’s “Phew” suggests cautious optimism, but Tesla’s market dive reflects broader, lingering unease.

Their alliance may be fractured, yet suddenly the former president is reinforcing that “the better they do, the better the USA does.”