TRUMP VS. MUSK: A Legal Analysis of Their Public Feud
(by Sourya Veer Pratap Deo, Xavier Institute of Management)
ABSTRACT
In early June 2025, tech mogul Elon Musk launched a blistering public critique of President Trump’s sweeping domestic bill (the so-called “One Big, Beautiful Bill Act”), calling it a “disgusting abomination”. President Trump swiftly replied on social media, warning that the government could “terminate Elon’s Governmental Subsidies and Contracts” to save “billions and billions”. This exchange sent shock waves through the markets (Tesla shares briefly plunged) and raised questions about free speech and executive power. Musk later deleted an unverified claim linking Trump to the Jeffrey Epstein files and apologized that his posts “went too far”. While no case has been brought forward, the legal ramifications of the feud remain a topic of intense debate. this blog traces the timeline of the conflict and investigates its potential impact within the American legal system.
TO THE POINT
Musk’s Attack on Trump’s Bill: Musk denounced Trump’s new budget/tax bill (the “One Big Beautiful Bill Act”) as a “disgusting abomination”, particularly opposing its cuts to clean-energy and EV tax credits.
Trump’s Retaliation: Trump threatened on Truth Social to cut off federal subsidies and contracts to Musk’s companies (SpaceX, Tesla) to save “billions and billions”. This triggered a steep drop in Tesla’s stock price.
Market Impact: Tesla stock fell over 14% in a single day (erasing about $150 billion in value) when the feud broke out. Market experts highlighted it as the biggest one-day decline in Tesla’s stock history.
Musk’s Retreat: Musk later deleted an online post linking Trump to Epstein and publicly apologized, saying he “regrets” that his attacks “went too far”. Trump called Musk’s apology “very nice” but also warned there would be “serious consequences” if Musk side with Democrats.
Legal Thresholds: As a public figure, Trump would have to prove actual malice to win any defamation suit against Musk. Courts apply an even higher bar for figures with substantial public roles.
Regulatory Clash: Parallel to the feud, Trump used the Congressional Review Act to void California’s electric-vehicle mandate (triggering a lawsuit by 11 states). He also rescinded a federal EV tax credit and imposed new EV fees under the proposed budget. These actions have drawn legal challenges (e.g. states argue the CRA can’t override Clean Air Act waivers).
USE OF LEGAL JARGON
Actual Malice: As established in New York Times Co. v. Sullivan (1964), this is the high evidently standard required for public figures to succeed in defamation cases. It means the statement must have been made with knowledge of its falsity or reckless disregard for the truth. This is directly relevant to Musk’s now-deleted Epstein post about Trump.
Viewpoint Discrimination: A First Amendment principle that prohibits the government from penalizing individuals or entities solely because of their political or ideological stance. Trump’s threat to cut off Musk’s federal contracts due to policy criticism could be viewed as unconstitutional viewpoint discrimination.
First Amendment Retaliation: A legal claim that can arise when a government actor punishes an individual for exercising free speech. Musk may invoke this if federal action is taken against Tesla or SpaceX as a direct result of his public statements.
Congressional Review Act (CRA): a legal tool that gives Congress the authority to repeal federal agency regulations within a set timeframe. Trump’s use of the CRA to undo California’s EV waivers is legally contentious, especially since CRA hasn’t historically been used to revoke state-level EPA exemptions.
EPA Waiver: A provision under the Clean Air Act allowing California to enforce stricter air pollution standards than federal ones. The legality of revoking such waivers via the CRA is now under judicial review.
Tariff Authority and IEEPA: The International Emergency Economic Powers Act (IEEPA) was cited in a recent ruling as an improper basis for broad tariffs. Courts held that Trump’s 2025 tariffs exceeded his statutory authority under this law.
Abuse of Power: While not formally adjudicated in this case, legal commentary suggests that threats to withdraw federal funding or contracts based solely on political speech could be challenged as executive overreach.
THE PROOF
In June 2025, tensions between Elon Musk and President Donald Trump erupted publicly after Musk harshly criticized Trump’s flagship policy proposal—the “One Big Beautiful Bill Act” (OBBBA). Musk denounced the bill as a “disgusting abomination”, citing its rollbacks on electric vehicle (EV) tax credits, cuts to green energy incentives, and the projected $2.4 trillion increase to the national debt. These provisions directly threaten Tesla’s and SpaceX’s business models, both of which rely heavily on federal support.
Trump quickly retaliated. On June 5, 2025, he posted on Truth Social that the easiest way to save money would be to “terminate Elon’s Governmental Subsidies and Contracts,” explicitly targeting Musk’s companies. This included lucrative federal arrangements: Tesla benefits from EV tax credits, while SpaceX holds key NASA and Department of Defence contracts.
The fallout from the feud triggered a 14% plunge in Tesla stock—the largest one-day percentage loss in its history—resulting in wiping out around $150 billion in market value. Investors were worried not just about possible government action, but also about new rules and political uncertainty.”
Escalating the conflict, Musk briefly posted a now-deleted tweet suggesting Trump’s name was “mentioned in the Epstein files.”. However, Musk later deleted the tweet and issued a public apology, saying his posts “went too far.” Trump responded by calling the apology “very nice,” although he also warned on NBC that there could still be “serious consequences” if Musk attempted to support Democrats.
Meanwhile, Trump escalated his broader anti-EV agenda. On June 12, he signed the Congressional Review Act to revoke California’s electric vehicle and diesel emissions regulations.. California and 10 other states filed lawsuits within 24 hours, arguing that the CRA cannot override state rights granted under the Clean Air Act. The lawsuits contend that revoking EPA waivers in this manner is legally invalid.
Throughout the feud, legal experts have raised concerns about the implications of a sitting president threatening to use executive power to financially punish a private citizen for political speech. If federal subsidies or contracts were canceled purely due to Musk’s criticism, it could raise constitutional questions around First Amendment retaliation and abuse of power.
At the same time, Musk’s deleted post accusing Trump of connections to Epstein—if proven knowingly false—could have opened the door to a defamation suit, though legal standards for public figures (as established by the “actual malice” standard in New York Times Co. v. Sullivan) remain difficult to meet.
Overall, the Trump–Musk conflict has created a complex legal landscape, with constitutional law, administrative law, and federal–state regulatory tensions intersecting. While no legal action has been initiated between the two, their feud may serve as a case study in the legal limits of political retaliation and protected corporate speech.
CASE LAWS
New York Times Co. v. Sullivan, 376 U.S. 254 (1964) – Defamation and Actual Malice
This seminal case established that public figures, like Trump, must prove “actual malice” to win defamation suits—i.e., that the false statement was made knowingly or with reckless disregard for the truth. Musk’s now-deleted tweet referencing Epstein likely wouldn’t meet the “actual malice” standard.
Musk v. Unsworth (2019) – Elon Musk’s Own Defamation Defense
In this high-profile trial, Musk was sued for calling a cave rescuer a “pedo guy.” He won the case, with the court affirming that hyperbolic statements online—even offensive ones—can be protected speech. This precedent supports Musk’s defense if defamation is raised again.
Rosenberger v. University of Virginia, 515 U.S. 819 (1995) – Viewpoint Discrimination
The Supreme Court ruled that the government cannot suppress speech based on its viewpoint. If Trump uses executive authority to cut contracts with Musk’s companies in retaliation for political criticism, this case bolsters a potential First Amendment retaliation claim.
United States v. Alvarez, 567 U.S. 709 (2012) – Protection of False Speech
This case reaffirmed that even knowingly false speech is protected under the First Amendment in certain contexts, unless it causes concrete harm. Musk’s now-retracted Epstein comment could be shielded under this doctrine.
American Institute for International Steel v. United States (2019) – Limits on Tariff Authority
While not directly involving Musk, this case challenges presidential tariff powers. It’s relevant as the U.S. Court of International Trade (2025) recently ruled tariffs under IEEPA unlawful—showing limits on executive economic retaliation.
CONCLUSION
The Musk–Trump feud may have defused for now, but it spotlights enduring legal issues. Musk’s deletions and apologies may avert any immediate lawsuit, but the episode underscores the extent to which corporate leaders can use free-speech protections to critique government policy. At the same time, Trump’s threats reveal how executive power can test the boundary between legitimate policy-making and personal retribution. Absent a specific statutory mandate or contractual violation, it would be unprecedented for a president to rescind billions in subsidies purely as punishment for speech. Should Trump follow through (for example, by instructing NASA or the IRS to withdraw support), the affected companies could mount constitutional or administrative-law challenges.
Meanwhile, legal battles already under way – the California EV lawsuit, appeals over tariffs, and anticipated challenges to the budget bill’s provisions – will clarify what presidents may and may not do. For example, if a court confirms that the CRA cannot strip state waivers, it would protect federalism in environmental policy. If Trump’s tariffs remain on hold, it will be a win for the separation of powers. Through it all, Musk and his enterprises remain highly dependent on the federal government (for NASA launches, tax incentives, etc.), while the Trump administration still needs Musk’s technology for its own agenda. In this sense they are intertwined: each seeks to preserve their agenda and interests within the bounds of the law. The outcome of their clash may ultimately hinge less on who has the bigger ego and more on established legal doctrines – once these brave new challenges make their way to court.
FAQS
Q1: Did Elon Musk break any laws by criticizing Trump or posting about Epstein?
No. Under the First Amendment, political speech and even controversial opinions are protected. The deleted Epstein tweet could be offensive, but likely not illegal unless proven defamatory under the “actual malice” standard.
Q2: Can Trump legally cut off federal contracts to Musk’s companies over criticism?
Not without potential legal consequences. Retaliating against political speech could violate First Amendment protections and lead to claims of viewpoint discrimination or abuse of power.
Q3: Is the “One Big Beautiful Bill Act” unconstitutional?
Not necessarily, but certain provisions—like EV rollback mandates and subsidy cuts—may face constitutional challenges and litigation, especially from states like California.
Q4: Has Musk filed any lawsuit against Trump?
No formal legal action has been taken by Musk or his companies against Trump as of now.
Q5: Could Tesla or SpaceX sue the federal government if contracts are canceled unfairly?
Yes. If cancellations are politically motivated, they could challenge the decision under the Administrative Procedure Act or for breach of contract.
