Trump–Musk Feud Sparks Market Jitters and Political Backlash

The dispute erupted after Musk criticized the Republican-led tax and spending bill, prompting President Trump to threaten the withdrawal of billions of dollars in federal contracts awarded to Musk’s companies, including Tesla and SpaceX.

The exchange, which played out across social media platforms Truth Social and X, has triggered a sharp response from investors. Tesla shares dropped more than 14 percent on Thursday, reflecting growing concerns over potential regulatory fallout.

Billionaire investor Bill Ackman urged both figures to end the feud. “We are much stronger together than apart,” Ackman posted on X. Musk responded: “You’re not wrong.”

In political circles, the incident is causing divisions. U.S. Congressman Jim Jordan told Fox News that he hoped the two would reconcile. Former White House strategist Steve Bannon, however, called for the government to seize SpaceX under the Defense Production Act and strip Musk of his security clearances.

Meanwhile, Musk’s idea of launching a new centrist political party gained attention. Mark Cuban voiced support on social media, and former presidential candidate Andrew Yang later suggested a new independent primary for the 2028 elections featuring Cuban, JPMorgan Chase CEO Jamie Dimon, and actor Matthew McConaughey.

Wall Street analysts are also weighing in on the potential impact of the feud. Dan Ives of Wedbush described the development as “a shock to the market.” He noted concerns about how the conflict may affect Tesla’s push for regulatory approval on autonomous driving technologies.

Ross Gerber, CEO of Gerber Kawasaki, criticized Musk’s approach. “Elon going postal on Trump and Tesla stock is getting walloped,” he wrote on X.

Gary Black, Managing Director at the Future Fund, said the Trump–Musk fallout diminishes the likelihood of national licensing for Tesla’s full self-driving program. His firm had recently sold its Tesla holdings.

David Rosenberg, founder of Rosenberg Research, told CNBC that the dispute could impact bipartisan support for U.S. space initiatives. “There’s a small group of Republicans now questioning continued support for SpaceX,” he said.

The public rift between Trump and Musk marks a shift from their earlier alliance, which saw the two frequently appear together at events and express mutual support. With the 2026 midterms approaching, the impact of their deteriorating relationship may extend beyond boardrooms and into electoral politics.