Slanging Match: Power Struggle Behind the Trillion-Dollar Market Value Evaporation
On June 5, 2025, a “long-distance slanging match” that shocked the world unfolded in American politics. Tesla CEO Elon Musk and US President Donald Trump, once seen as “golden allies,” completely fell out over a controversial bill. This conflict not only exposed the deep entanglement of American politics and business interests but also triggered market concerns about the economic outlook – Tesla’s market value evaporated by over $150 billion in a single day, and the US debt crisis neared a breaking point.
In July 2024, Musk supported Trump’s campaign with $300 million in political donations and became the head of Trump’s newly established “Department of Government Efficiency” (DOGE). At the time, the pair grandly declared their intention to “drain the Washington swamp,” planning to cut $1 trillion in fiscal spending. However, less than a year later, this relationship ended over the “Big and Beautiful” tax reform bill.
On May 22nd, the US House of Representatives passed the tax reform bill strongly advocated by Trump. Its core contents included:
Extending the 2017 tax cuts and adding new provisions like tax-free tips, making the wealthy class the biggest beneficiaries.
Investing $350 billion in strengthening border security while cutting clean energy subsidies.
Raising the debt ceiling by $4 trillion, paving the way for unlimited money printing.
Musk fiercely criticized the bill as “utterly absurd,” claiming it would increase US debt by $2.4 trillion and cause 10.9 million people to lose health insurance. Trump fired back, accusing Musk of “ingratitude” and threatening to terminate government subsidies and contracts for Tesla.
As the core of Musk’s business empire, Tesla became “collateral damage” in this political struggle. On June 5th, influenced by the public feud between the two men, Tesla’s stock price plummeted 14.26%, evaporating over $150 billion in market value – its largest single-day drop of the year. The market fears that if Trump pushes for more stringent tariff policies, Tesla’s supply chain and global layout will face further shocks.
Current US debt exceeds $36 trillion. The Congressional Budget Office warned that if the tax bill passes and the debt ceiling cannot be adjusted, the US could face a government default risk by the end of August 2025. Moody’s has already downgraded the US credit rating, predicting the debt-to-GDP ratio could soar to 134% within the next decade.
Although the bill narrowly passed the House, Republican internal divisions were stark. Utah Senator Mike Lee publicly questioned the deficit risks, while Democrats slammed it as “bankrupting America.” Musk even launched a poll where 81% of participants supported forming a “new party” to challenge the existing system.
Musk had previously attempted to streamline government agencies through the DOGE, but with minimal results (only $200 billion cut, far below the $1 trillion target). The passage of the tax bill shattered his reformist illusions.
The bill is seen as a core bargaining chip for Trump in the 2026 midterm elections. By stimulating consumption through tax cuts and protecting industries with tariffs, Trump aims to replicate the economic success of 2017. However, high deficits could trigger uncontrollable inflation, potentially backfiring on his campaign prospects.
Musk’s public falling out signals that tech giants are no longer willing to be mere policy “backdrops.” His calls to “kill the bill” and threats to form a new party could sow the seeds for the 2026 elections.
While Republicans hold 53 Senate seats, fiscal hawks have voiced deficit concerns; the bill may require significant modifications.
Musk needs to stabilize investor confidence, but political risks may weigh on the stock price long-term.
The Treasury expects funds to be exhausted by late August; if partisan gridlock persists, global financial markets could face turbulence.
The rift between Musk and Trump is not just a personal feud, but a microcosm of America’s political polarization and the power struggle between capital and political authority. As “tax cuts” and “borrowing” become the policy leitmotif, sacrificing ordinary citizens’ welfare like healthcare and education, a larger economic storm may well be brewing.
Welcome to F.S.C Co. Ltd – Your Trusted Partner in Stainless Steel Jewelry, Packaging & Organizers F.S.C Co. Ltd, a leading manufacturer in China, specializes in crafting high-quality stainless steel jewelry, jewelry boxes, and Jewelry organizers with over 10 years of expertise. Combining traditional craftsmanship and modern technology, we turn your designs into premium products that stand out. From small custom orders to bulk production, our team ensures precision, reliability, and fast turnaround at every step. We pride ourselves on delivering excellence that meets international standards. Choose F.S.C for solutions that boost your brand’s value and customer trust. Let’s collaborate to create stunning, timeless pieces!
