Elon Musk and Trump: A Powerful Alliance or a Conflict of Interest?

Elon Musk, the world's richest man, now finds himself closer than ever to US political power. With $20 billion in government contracts across his businesses, Musk's relationship with President Donald Trump has raised concerns about potential conflicts of interest. His influence over federal decision-making—while beneficial for his companies—has also sparked fears about unfair advantages and global repercussions.

Let’s explore how Musk’s businesses could benefit—or suffer—from his growing proximity to the Trump administration.

X (formerly Twitter) – A Financial Turnaround Under Trump

Musk’s $44 billion acquisition of Twitter (now X) was initially seen as a costly mistake, but his new political connections have transformed the platform’s prospects.

• Advertisers, including Amazon, have returned in large numbers.
• The Trump administration frequently announces policies on X, increasing its importance.
• The platform’s debt—once a major financial burden—has been successfully sold off, easing pressure on Musk.

However, X is also under EU investigation for spreading disinformation, and tensions between the US and European regulators could create further challenges.

Tesla – Could Trump’s Policies Hurt EV Sales?

Tesla is the crown jewel of Musk’s empire, but it faces significant risks under Trump’s presidency.

• The administration has rolled back EV-friendly policies, including a £7,500 federal tax credit.
• Trump’s hostility toward electric vehicles could weaken consumer demand.
• Tesla’s regulatory credit sales—worth $2.8 billion in 2024—could be scrapped, affecting profitability.

Musk insists that the EV revolution is inevitable, but Tesla’s declining sales in 2024 suggest otherwise. The European market, in particular, has turned against Tesla, partly due to Musk’s public support for far-right politicians.

Another major concern is Trump’s trade war with China, where Tesla has its largest Gigafactory. If tensions escalate, Tesla’s Chinese operations and supply chains could suffer.

SpaceX – The Trump Administration’s Favourite?

SpaceX, Musk’s $350 billion space company, has cemented itself as the dominant player in US space operations. Trump’s admiration for the company suggests it will continue to thrive.

• SpaceX’s government contracts are expected to increase, particularly for NASA and military projects.
• Trump is backing a massive missile defence programme, which could rely heavily on SpaceX’s satellite technology.
• The appointment of Jared Isaacman (a close Musk ally) as NASA Administrator strengthens SpaceX’s advantage over competitors like Boeing and Blue Origin.

The only potential threat? Regulatory battles with agencies like the Federal Aviation Administration—but with Musk leading a new "efficiency task force," even these obstacles may be removed.

Starlink – Global Expansion at Risk?

Starlink, SpaceX’s satellite broadband network, has seen growing political controversy.

• Canada cancelled a major contract in retaliation for Trump’s threats to impose tariffs.
• Brazil temporarily banned Starlink, following Musk’s support for right-wing political movements.
• Under Biden, the Federal Communications Commission (FCC) had delayed Starlink’s expansion, but Trump's influence could help Musk push through regulatory approvals.

The geopolitical risks remain high, but in the US, Starlink could benefit from reduced regulations.

xAI – Trump’s AI Policies Favour Musk

Musk’s AI startup, xAI, is set to thrive under Trump’s pro-business tech policies.

• The administration scrapped Biden-era AI regulations, making it easier for companies like xAI to expand.
• Trump appointed David Sacks, a Musk ally, as AI chief, further aligning policy in Musk’s favour.
• Musk is using his political power to challenge OpenAI (his former company), even launching a hostile takeover bid.

While this could strengthen Musk’s AI dominance, critics warn that lack of oversight could increase risks associated with AI development.

The Bigger Picture: A Win for Musk, But a Risk for the Economy?

Musk’s relationship with Trump is undoubtedly boosting his businesses—but not without controversy.

 Potential Benefits:

• Less government regulation for his companies.
• Increased government contracts for SpaceX, Tesla, and Starlink.
• Stronger financial performance for X.

 Major Risks:

• Tesla faces market decline due to Trump’s anti-EV stance.
• Starlink could suffer global backlash.
• Musk’s growing political influence raises concerns about monopolies and fairness.

Conclusion: Power or Peril?

Musk’s alliance with Trump offers huge opportunities, but also serious challenges. His companies stand to benefit financially and politically, yet the risks of trade wars, regulatory scrutiny, and global backlash could limit his success.

Is this a win for American innovation—or a dangerous concentration of power? The answer will unfold in the coming years, shaping the future of technology, space, and global politics.

Sources: (BBC.co.uk, FT.com, ChatGPT)