On June 3, 2025, the already strained relationship between President Donald Trump and billionaire Elon Musk took a dramatic turn when Trump reportedly issued a stark warning: if Musk continued to betray him, Tesla would face heavy taxes that could cripple the electric vehicle giant. This threat, which emerged amidst Musk’s scathing criticism of Trump’s “One Big Beautiful Bill Act,” marks a new low in their once-celebrated alliance. As of June 4, 2025, the fallout between the two titans has sparked widespread debate about loyalty, power, and the intersection of politics and business in Trump’s second term. The warning not only underscores the fragility of their partnership but also raises questions about the potential economic and political ramifications for Tesla, Musk, and the broader U.S. landscape.
A Partnership Built on Mutual Gain
The Trump-Musk alliance was once a hallmark of the 2024 election cycle, blending political power with unparalleled financial influence. Musk, the CEO of Tesla, SpaceX, and xAI, emerged as Trump’s top donor, contributing nearly $300 million to his campaign against Kamala Harris. In return, Trump appointed Musk to lead the Department of Government Efficiency (DOGE), a taskforce aimed at slashing federal spending and restructuring government agencies. Musk’s role in DOGE made him a prominent figure in Trump’s administration, often seen alongside the president at events like the SpaceX Starship launch in Texas and in the Oval Office, where he was dubbed Trump’s “first buddy.” Their public displays of unity, including a joint interview with Fox News’ Sean Hannity in February 2025, suggested a partnership poised to reshape American governance.
However, beneath the surface, their relationship was always a delicate balance of mutual benefit and competing egos. Trump, known for demanding absolute loyalty, has a history of discarding allies who challenge him, as seen with figures like Paul Manafort and Roger Stone. Musk, meanwhile, is a tech innovator with a globalist outlook, often prioritizing his business interests over political allegiance. Early tensions emerged over policy disagreements, particularly Trump’s tariffs on China, which threatened Tesla’s operations in Shanghai, and the administration’s $500 billion AI initiative, Stargate, which partnered with Musk’s rival Sam Altman of OpenAI. Musk’s public advocacy for free trade and lower tariffs clashed with Trump’s protectionist “America First” agenda, setting the stage for their eventual rift.
The Breaking Point: Musk’s Criticism of Trump’s Bill
The turning point came with Musk’s vocal opposition to Trump’s “One Big Beautiful Bill Act,” a sprawling legislative package that passed the House in May 2025. The bill, which extends the 2017 tax cuts, boosts military and border security spending, and raises the debt ceiling by $4 trillion, also eliminates clean energy incentives, including a $7,500 tax credit for electric vehicles—a move that directly impacts Tesla’s market competitiveness. The Congressional Budget Office projects the bill will add between $2.3 trillion and $5 trillion to the national debt over the next decade, a figure that alarmed Musk, who had spent months at DOGE attempting to reduce federal spending.
Musk’s frustration boiled over after his departure from the Trump administration on May 29, 2025. In a series of posts on X on June 3, 2025, he called the bill a “disgusting abomination,” warning that it would “massively increase the already gigantic budget deficit to $2.5 trillion” and “burden American citizens with crushingly unsustainable debt.” He went further, shaming lawmakers who voted for it and threatening to support efforts to unseat them in the 2026 midterms, stating, “In November next year, we fire all politicians who betrayed the American people.” These comments, coming just days after his Oval Office send-off, were seen by Trump as a direct betrayal, especially given Musk’s role as a former advisor.
Trump’s Retribution: A Threat to Tax Tesla
Trump’s response was swift and uncompromising. According to sources familiar with the matter, the president warned Musk that any further betrayal would result in heavy taxes on Tesla, a move that could devastate the company’s financial standing. Trump reportedly told Musk, “You do it to Tesla, and you do it to any company, we’re going to catch you, and you’re going to go through hell.” This threat aligns with Trump’s broader economic strategy, which has already seen him impose steep tariffs on imports, including a 25% tax on imported vehicles and a 34% tariff on Chinese goods, with an additional 50% tariff on China threatened in April 2025. For Tesla, which relies on global supply chains—25% of the components for its Model Y are manufactured outside the U.S.—such taxes could significantly increase costs and erode its market position.
Trump’s warning also reflects his insistence on domestic manufacturing. On June 2, 2025, he emphasized that automakers, including Tesla, must build their cars and parts entirely in the U.S., a policy that could further complicate Tesla’s operations given its reliance on international suppliers. This stance has fueled speculation among observers on X, with some users suggesting that Trump’s threat is a form of “blackmail” to force Musk into compliance, potentially in exchange for billion-dollar government contracts for SpaceX or other Musk ventures. Others have questioned whether Trump might escalate further, even joking about deporting Musk—a South African-born U.S. citizen—though such a move is legally implausible.
The Impact on Tesla: A Company at a Crossroads
Tesla is already grappling with significant challenges, and Trump’s threat adds another layer of uncertainty. The company reported a 71% drop in first-quarter profits in 2025, with net income falling to $409 million compared to $1.39 billion in the same period in 2024. Its stock has lost about a quarter of its market value since Musk took on his DOGE role, reflecting investor concerns over his political involvement and the backlash it has generated. Protests at Tesla outlets across the U.S. and Europe, driven by Musk’s cost-cutting measures at DOGE, have contributed to declining sales, with a 13% drop reported compared to the previous year. The elimination of EV tax credits in Trump’s bill further threatens Tesla’s competitiveness, as these credits have been a key driver of demand in the U.S., Tesla’s primary profitable market.
Analysts have warned that Trump’s tariffs and potential taxes could exacerbate Tesla’s woes. Dan Ives of Wedbush Securities, a longtime Tesla supporter, lowered the company’s stock price target from $550 to $315 in April 2025, citing “softer demand estimates” due to the tariffs and Musk’s association with Trump. Ives noted that Tesla has become a “political symbol globally,” a development that has turned into a “brand crisis tornado” for the company. If Trump follows through on his threat to impose heavy taxes, Tesla could face increased costs for its imported components, further eroding its profit margins and potentially driving consumers toward domestic competitors or Chinese brands like BYD, Nio, and Xpeng, especially if China retaliates against U.S. firms in response to Trump’s trade policies.
A Critical Perspective: Power, Loyalty, and Retribution
Trump’s threat to tax Tesla highlights the transactional nature of his relationship with Musk, where loyalty is paramount, and dissent is met with swift retribution. The president’s willingness to target Tesla—a company that employs thousands of Americans and has been a leader in the EV industry—raises questions about the intersection of personal vendettas and economic policy. While Trump frames his tariffs and domestic manufacturing push as part of his “America First” agenda, critics argue that such measures disproportionately harm innovative companies like Tesla, which rely on global supply chains to remain competitive. The threat also underscores Trump’s history of using economic levers to punish perceived adversaries, a tactic that could have far-reaching implications for other businesses that cross him.
Musk’s role in this saga is equally complex. His criticism of Trump’s bill aligns with his stated concerns about the national debt, a cause he championed at DOGE, where he aimed to cut $2 trillion in federal spending but achieved only $175 billion in savings. However, Musk’s opposition may also be driven by self-interest—the bill’s elimination of EV tax credits and clean energy incentives directly threatens Tesla’s bottom line. His decision to speak out so publicly, especially after leaving the administration, suggests a calculated move to distance himself from Trump’s policies and rebuild his public image, which has suffered significantly since his DOGE tenure. Polls in April 2025 showed Musk’s favorability rating at a net -13 points, down from +29 before the election, reflecting widespread discontent with his political involvement.
Broader Implications: A Test of Influence
The Trump-Musk feud, punctuated by Trump’s threat to tax Tesla, is a test of influence for both men. For Trump, it’s an opportunity to reassert his dominance over a former ally, signaling to others in his orbit that disloyalty will not be tolerated. For Musk, it’s a chance to leverage his wealth and control over X to rally opposition to Trump’s agenda, as seen in his call to “fire all politicians who betrayed the American people” in 2026. However, Musk’s influence over the GOP may be waning—Senate Majority Leader John Thune dismissed his criticism as a “difference of opinion,” and House Speaker Mike Johnson called Musk “terribly wrong” about the bill, indicating that Republican lawmakers are prioritizing Trump’s agenda over Musk’s objections.
The potential taxes on Tesla also highlight the broader risks of intertwining business and politics. Musk’s decision to back Trump in 2024, despite the GOP’s historical opposition to clean energy, was a gamble that has backfired, leaving Tesla vulnerable to retaliatory policies. This dynamic serves as a cautionary tale for other business leaders considering deep involvement in political spheres, where loyalty can quickly become a weapon of coercion. As the Senate debates Trump’s bill, with a target passage date of July 4, 2025, the outcome will likely shape the future of Trump and Musk’s relationship—and determine whether Tesla can weather the storm of Trump’s retribution.
