The world's richest man and the world's most powerful individual are at war. And the fallout is sending shockwaves through both Wall Street and world capitals.
The very public rupture between US President Donald Trump and tech billionaire Elon Musk has sent tremors through financial markets and raised fresh concerns over the stability of public–private partnerships in an increasingly politicised global economy. The row, which unfolded over the course of Thursday, threatens not only US federal contracts worth billions but also investor confidence in Musk-led ventures that are closely interwoven with America's industrial policy.
The dispute began when Musk claimed—on his social media platform X—that his support had been critical to Trump’s 2024 election win. Within hours, the exchange turned acrimonious. Trump fired back with a threat to terminate all government subsidies and contracts linked to Musk’s firms. The economic reverberations were immediate: Tesla shares fell 14 percent in Thursday’s trading, and market sentiment briefly turned risk-off as investors priced in the growing uncertainty.
Musk’s group of companies—Tesla, SpaceX, Starlink and Neuralink—are all heavily exposed to US federal funding, not only through subsidies but also through long-term strategic contracts. SpaceX alone has secured over $15 billion in deals with NASA and the US Department of Defence, while Tesla has benefited from federal electric vehicle tax credits, loan guarantees, and multiple state-level incentives.
Trump’s threat to sever ties was first aired at a press briefing and later reiterated on his platform, Truth Social. “The easiest way to save money in our budget—billions and billions of dollars—is to terminate Elon’s governmental subsidies and contracts,” the president posted.
Market analysts warned of far-reaching consequences for global supply chains, investor appetite, and industrial competition. “If these contracts are cancelled or delayed, it creates a vacuum that global competitors—especially China—will rush to fill,” said Tim Gagnon, an aerospace analyst. “SpaceX isn’t just a national asset; it's a lynchpin in international satellite launches and military logistics.”
Beyond the immediate fiscal impact, the feud has raised broader concerns over the politicisation of industrial policy. “Musk’s companies have long been seen as anchors of America’s innovation economy,” said Clara Zhang, investment strategist at Allianz Global Investors. “But if government support begins to hinge on political loyalty, institutional investors will need to reassess their exposure.”
Musk’s influence over economic and regulatory priorities has been substantial. His America PAC reportedly spent over $290 million during the 2024 election cycle, supporting deregulation, tax reforms and AI governance. With that channel now effectively severed, key policy trajectories in sectors such as clean energy, robotics and electric mobility may shift direction under renewed political pressure.
Investor concerns are not confined to Musk’s enterprises alone. The dramatic slide in Tesla's share price on Thursday wiped out nearly $80 billion in market capitalisation. While Tesla has weathered volatility before, this instance—sparked by political animosity—could trigger more systemic risk. “It’s not just about Tesla anymore,” said Edward Moya, senior market analyst. “It’s about whether the US remains a predictable environment for long-term capital investment.”
Reverberations were felt across international markets. Major suppliers to Musk’s firms—including Panasonic, CATL and ASML—recorded declines, and tech indices across Europe and Asia closed lower. US Treasury yields edged higher, while the dollar weakened slightly as traders weighed the prospect of another confrontation between Washington and Silicon Valley.
Musk, however, retains significant leverage. Starlink’s satellite internet network operates in over 60 countries, often in regions of geopolitical sensitivity. SpaceX’s launch infrastructure is relied upon by both commercial clients and national space agencies worldwide. Any disruption to these operations could create diplomatic headaches and open the door to state-backed rivals such as China’s CASC or Europe’s Arianespace.
In the private capital markets, Musk’s clout remains formidable. Though some of his political interventions—such as a failed $20 million campaign in Wisconsin earlier this year—have drawn criticism, investor demand for SpaceX and Neuralink remains strong. A prolonged standoff with the White House, however, may dampen future funding rounds or lead to heightened regulatory scrutiny.
“This is not a routine disagreement,” said Olivia Walker, head of public policy at a major West Coast venture capital firm. “It’s the most powerful man in the world publicly vowing to dismantle the most strategically important tech portfolio in the country—over a personal feud.”
There is also the prospect that Musk could redirect his considerable financial firepower against Trump’s political allies in the 2026 midterms, potentially exacerbating the regulatory and legislative volatility already roiling the tech and defence sectors.
Though some in the market hope the dispute will soon be defused, others are preparing for long-term fallout. “We’re advising clients to revisit their US tech exposure, especially in sectors where executive fiat could override regulatory norms,” said a senior portfolio manager at a major London-based pension fund.
White House officials sought to downplay the dispute on Friday. Press Secretary Karoline Leavitt described the situation as “unfortunate” and insisted that “contractual processes remain under review.” But markets showed little sign of being reassured.
As two of the most influential forces in global business—an American president and the Musk corporate empire—shift from strategic alignment to open confrontation, the consequences may well be felt far beyond Wall Street. For investors, regulators and rival governments alike, the break-up signals a volatile new era in the intersection of politics and enterprise.
