What Trump and Musk Stand to Lose as Their Partnership Crumbles

Summary

WSJ What’s News: Episode Summary Title: What Trump and Musk Stand to Lose as Their Partnership Crumbles
Host: The Wall Street Journal
Release Date: June 6, 2025

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1. The Fallout Between President Trump and Elon Musk

The episode kicks off with an in-depth analysis of the deteriorating relationship between former President Donald Trump and Elon Musk, the CEO of Tesla and SpaceX. The once formidable partnership has rapidly unraveled, marked by public disputes and threats that have significant implications for both parties.

Key Developments:

• Oval Office Confrontation: The rift intensified when Trump confronted Musk during an Oval Office meeting with Germany’s Chancellor, openly expressing his frustrations. By evening, tensions escalated as both leaders traded threats.
• Threats and Political Maneuvering: Trump hinted at the possibility of cutting off government contracts to Musk’s companies, while Musk retaliated by suggesting the creation of a new political party, advocating for Trump’s impeachment, and warning that Trump's tariffs could trigger a recession.

Quote Highlight: Damian Poletta, Washington coverage chief at The Journal, remarked on the precarious position Trump faces:
"The president lacks much room to maneuver on Capitol Hill as he tries to hold together his MAGA governing coalition."
(Timestamp: 02:09)

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2. Impact on Trump’s Economic Agenda

The fallout with Musk intersects with Trump’s broader economic strategies, particularly his ambitious tax cut bill aimed at preventing tax increases for millions of Americans.

Economic Plan Components:

• Trade War: A cornerstone of Trump’s economic strategy has been the ongoing trade war.
• Tax Cut Legislation: The proposed bill seeks significant tax reductions but faces opposition due to concerns about increasing the national deficit.

Challenges Highlighted:

• Musk has publicly criticized the tax cut bill, labeling it an "audacious waste of government money" and predicting it would "explode the deficit by more than $2 trillion."
  (Timestamp: 02:09)
• This opposition complicates Trump's efforts to secure bipartisan support, especially after the bill narrowly passed the House by a single vote, largely due to Trump's influence.

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3. Financial Repercussions for Elon Musk and His Companies

The deterioration of the Trump-Musk relationship has tangible financial consequences, particularly for Tesla and SpaceX.

Tesla’s Decline:

• Stock Performance: Tesla’s shares plummeted by 14% in a single day, erasing approximately $150 billion from its market capitalization—the largest one-day decline in the company’s history. Elon Musk saw his net worth decrease by about $27 billion.
  (Timestamp: 03:23)
• Regulatory Challenges: Tesla’s ambition to deploy a nationwide fleet of self-driving cars hinges on favorable federal regulations, which are under threat from the current administration. Additionally, recent Congressional actions to eliminate California’s authority to set tailpipe emissions standards could significantly impact EV investments.
  (Timestamp: 04:28)

SpaceX’s Vulnerability:

• Federal Contracts at Risk: SpaceX holds substantial federal contracts, including a $1.8 billion classified deal with the National Reconnaissance Office and critical roles in NASA’s human exploration programs. The ongoing conflict with Trump threatens these agreements.
  (Timestamp: 04:38)
• Regulatory Dependencies: SpaceX relies on continuous approvals from air safety and environmental regulatory bodies, making the company's operations highly susceptible to political and administrative shifts.
  (Timestamp: 04:38)

Quote from Caitlin McCabe, Markets Reporter: "With Musk out attacking the bill, that's going to make it very hard for maybe a dozen, maybe more Republicans to follow through because now they've been called out for voting for a bill that would grow the debt and the deficit."
(Timestamp: 02:54)

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4. Senate Republicans vs. White House NASA Budget Cuts

Amid the Trump-Musk drama, Senate Republicans are actively resisting the White House’s proposal to slash NASA’s budget by approximately 25%.

Proposed Budget Cuts:

• Impact on NASA: A significant reduction would lead to layoffs, decreased funding for the International Space Station, substantial cuts to science programs, and disruptions to the Artemis mission aimed at returning American astronauts to the Moon by 2027.

Republican Response:

• Funding Allocations: GOP officials are advocating for directing billions towards programs facing budget cuts, emphasizing the importance of maintaining the lunar program to outpace China’s space ambitions.

Related Developments:

• Educational Policies: Concurrently, President Trump’s attempt to bar international students from enrolling at Harvard was blocked by a federal judge, allowing the university to continue admitting foreign students amid ongoing legal battles.
  (Timestamp: 05:40)

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5. Iran’s Ballistic Missile Expansion with Chinese Support

In an exclusive report, the Podcast delves into Iran’s recent strategic shift towards China in bolstering its ballistic missile capabilities.

Key Insights:

• Material Acquisition: Iran has ordered thousands of tons of Ammonium Perchlorate from China, a critical component for solid propellant ballistic missiles. This move signifies Iran’s intent to both enhance its missile production and supply its allies, such as the Houthis and Hezbollah, with advanced weaponry.
  (Timestamp: 07:27)

Geopolitical Implications:

• Strengthened Deterrence: Despite prior attacks by Israel that debilitated its military capabilities, Iran’s missile arsenal remains a formidable deterrent.
• China’s Role: Analyst Lawrence Norman points out that China holds significant leverage in the current negotiations with Iran, more so than Russia.
  "If China were helping the US to solve this crisis, it would probably be more effective than anything that Putin can do."
  (Timestamp: 09:29)

Diplomatic Tensions:

• International Sanctions: The UK, France, and Germany are threatening to reinstate sanctions on Iran following an IAEA report indicating Iran’s failure to declare certain nuclear materials, adding complexity to the ongoing negotiations.
  (Timestamp: 09:11)

Regional Conflicts:

• Middle East Strife: Israel has conducted strikes in Beirut targeting a Hezbollah drone facility, marking a significant escalation in tensions and challenging recent ceasefire agreements. Concurrently, Russia continues its missile and drone assaults across Ukraine, intensifying the conflict in the region.
  (Timestamp: 08:28)

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6. London Stock Exchange Faces Turbulence Amid Corporate Exoduses

The episode also explores the recent instability within the London Stock Exchange, highlighted by several high-profile companies contemplating or executing shifts to U.S. markets.

Notable Movements:

• Wise’s Possible Relocation: Initially seen as a success for London, fintech company Wise is considering moving its primary listing to the U.S., reflecting a broader trend of companies seeking more favorable market conditions.
  (Timestamp: 12:00)

• Other Companies on the Move: Semiconductor design firm Arm and buy-now-pay-later provider Klarna are among the companies either shifting their listings or planning to pursue IPOs in New York instead of London.
  (Timestamp: 12:00)

Economic Context:

• UK’s Economic Challenges: These delistings occur despite the UK securing a trade deal with the U.S. and amid predictions of sluggish economic growth from the OECD, highlighting persistent economic uncertainties.
  (Timestamp: 12:35)

London’s Resilience:

• Mayor’s Optimism vs. Market Realities: While London’s Mayor Sadiq Khan promotes the city as a stable economic hub, the stock exchange's recent setbacks suggest underlying vulnerabilities.
  (Timestamp: 12:35)

Quote from Deputy Finance Editor Quentin Webb: "We have had other high profile companies choose to go public in the US Instead of the UK... amid longstanding economic issues with the OECD predicting weak economic growth for the UK this year and next."
(Timestamp: 12:35)

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7. Global Market Movements and Financial Indicators

The episode concludes with a brief overview of notable global financial developments that influence market dynamics.

India’s Monetary Policy:

• Rate Cut Decision: The Reserve Bank of India announced a larger-than-expected interest rate cut, supported by cooling inflation and robust economic growth, transitioning to an accommodative monetary policy stance amid uncertainties surrounding U.S. tariffs.
  (Timestamp: 10:11)

Market Sentiment:

• Volatile Stocks: The episode underscores the ongoing volatility in major stock indices, exacerbated by significant corporate movements and geopolitical tensions.

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Conclusion

This episode of WSJ What’s News provides a comprehensive overview of the escalating conflict between Donald Trump and Elon Musk, delving into the broader economic and political ramifications. It also sheds light on Iran’s bolstering missile capabilities with Chinese assistance, the precarious state of the London Stock Exchange, and significant global financial movements. Through expert analysis and up-to-date reporting, listeners gain a nuanced understanding of the interconnected forces shaping today’s world.

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Produced by Daniel Bach and Kate Bullivant. Supervising Producer: Sandra Kilhoff. Hosted by Luke Vargas.

Transcript

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[Luke Vargas]

As Trump and Musk torch their partnership, we'll look at what each stands to lose. Plus, GOP senators move to shore up funding for NASA programs threatened by budget cuts. And we exclusively report that Iran turns to China as it stocks up on materials for ballistic missiles.

[Lawrence Norman]

President Trump has said he wants Vladimir Putin to help solve the Iranian nuclear cris, yet he held a call with President Xi of China where they didn't discuss Iran. It is in fact China that has the leverage.

[Luke Vargas]

It's Friday, June 6th. I'm Luke Vargas for the Wall Street Journal and here is the AM edition of what's news, the top headlines and business stories moving your world today. We begin today with more fallout from the show stopping breakup between President Trump and the world's richest man, Elon Musk. That meltdown escalated quickly yesterday afternoo as Trump used an Oval Office meeting with Germany's chancellor to publicly lay out his frustrations with Musk. And by the evening, the two men were trading threats with Trump, toying with the idea of cutting off government contracts to Musk's companies and Musk floating the creation of a new political party, suggesting Trump should be impeached and saying his tariffs would trigger a recession. The extraordinary fight carries risks on both sides, especially as Journal Washington coverage chief Damian Poletta said said that the president lacks much room to maneuver on Capitol Hill as he tries to hold together his MAGA governing coalition.

[Damian Poletta]

There are two central planks of President Trump's economic plan. One is the trade war that we're all quite familiar with. The second part is this big tax cut bill which must pass by the end of this year in order to prevent taxes from going up on millions of Americans. Elon Musk has come out attacking that bill, calling it an audacious waste of government money and also saying that it would explode the deficit and it would grow the deficit by more than $2 trillion. Now, President knows he has little margin for error if he wants only Republicans to pass this bill. The bill did pass in the House, but just by one vote in a way because Trump was twisting arms and getting Republicans across the finish line. But With Musk out attacking the bill, that's going to make it very hard for maybe a dozen, maybe more Republicans to follow through because now they've been called out for voting for a bill that would grow the debt and the deficit.

[Luke Vargas]

We'll find out more in the coming weeks as Republicans hope to deliver the bill to Trump's desk by July 4th. But the financial toll of the falling out for Musk isn't taking that to assess. Caitlin McCabe is a journal Markets reporter. Caitlin our colleagues on the Evening what's News podcast yesterday briefly noted that a drop in Tesla's shares yesterday helped to drag down the nasdaq. Overall. This has admittedly been a pretty volatile stock lately, but this was no ordinary drop.

[Caitlin McCabe]

Yeah. So Tesla shares fell 14% yesterday and that wiped out about $150 billion from the company's market cap, which was its biggest one day decline ever. According to Dow Jones data. Elon Musk himself lost about 27 billion in net worth. But just thinking beyond yesterday's moves, there's a lot of longer term implications for Elon in the worlds of business and finance. So starting with Tesla, one of Tesla's big ambitions has been to roll out a nationwide fleet of self driving cars. But in order to do that, Tesla needs regulatory changes at the federal level, which Elon has been pushing. Meanwhile, a bigger blow to Tesla could come from White House efforts to weaken fuel economy and emissions rules. Last month, Congress voted to eliminate California's ability to set its own limits on tailpipe emissions, effectively killing one of the biggest drivers of EV investment in the.

[Luke Vargas]

U.S. all right, Tesla, very exposed to regulatory moves there, as you laid out nicely. And as if that weren't enough, there's SpaceX kind of in a similar position as well.

[Caitlin McCabe]

SpaceX has billions of dollars in federal contracts which could now possibly be in jeopardy. So it's the only US Space firm regularly transporting astronauts to and from the International Space Station. It's struck agreements with U.S. spy agencies, including a $1.8 billion classified deal with the National Reconnaissance Office, an agency that operates surveillance satellites. And it's also a big part of NASA's flagship human exploration program. On top of that, SpaceX needs air safety regulators to regularly review its flight plans and environmental agencies to help regulate company plans for launch sites. And so with this sort of spectacular unraveling of this partnership with Elon and Trump, all of this just got a lot more complicated for Elon and his companies.

[Luke Vargas]

That was Journal markets reporter Caitlin McCabe. Caitlin, thank you so much.

[Caitlin McCabe]

Thanks for having me.

[Luke Vargas]

Meanwhile, Senate Republicans are pushing back on a recent White House proposal to cut NASA's budget by about 25%. If passed by Congress, the budget would prompt layoffs at the agency, reduce funding for the International Space Station, impose big cuts to science programs and unwind the current setup of the Artemis mission to return American astronauts to the moon as soon as 2027. In response, GOP officials are discussing directing billion toward programs facing reductions, with lawmakers saying the lunar program is essential for returning NASA astronauts to the moon before China and President Trump's second attempt to bar international students from Harvard has been blocked by a federal judge in Boston after the university argued that the action was part of a campaign of retribution over the exercise of its First Amendment rights. The ruling means Harvard can continue enrolling foreign students while the case proceeds. Coming up, Iran buys ingredients for hundreds of new ballistic missiles from China and we'll look back at a rocky week for the London Stock Exchange. We've got those stories and much more after the break.

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[Luke Vargas]

We are exclusively reporting that Iran has ordered thousands of tons of ballistic missile ingredients from China. Journal reporter Lawrence Norman says the buildup comes after an Israeli attack last year severely damaged Iran's military capabilities.

[Lawrence Norman]

Iran is going to get from China thousands of tons of something called Ammonium Perchlorate. That is a material that basically you plug into a ballistic missile to make it explode. And the purchase is a sign that Iran wants to continue to build up its production of so called solid propellant ballistic missiles and also to pass them to its militia allies in the region like the Houthis and the Hezbollah. Iran's ballistic missile arsenal is one of its strongest military assets and even though Iran's defenses from the US And Israel have become pretty weak, its ability to retaliate with ballistic missiles is a significant deterrent.

[Luke Vargas]

Beijing has said it is unaware of any contract. According to Lawrence, the deal with the Chinese firm was almost certainly agreed to before President Trump announced new nuclear talks with Iran in but could nonetheless have a bearing on negotiations.

[Lawrence Norman]

Obviously the greater Iran's military prowess then the greater leverage it has in those talks. One of the premises of the Trump administration push for talks now is that Iran was weak, it was vulnerable to Israeli and US Attack, its economy was struggling, its most dangerous ballistic missile supply was slowing. This obviously changes one of those factors.

[Luke Vargas]

Another factor for who holds the power in talks is that the uk, France and Germany are threatening to bring back sanctions on Iran after an IAEA report found it hadn't declared nuclear materials. And Lawrence said it's just one more example of how many countries are playing a role in complex negotiations.

[Lawrence Norman]

There's a certain irony in the last few days that President Trump has said he wants Vladimir Putin to help solve the Iranian nuclear crisis, yet he helps held a call with President Xi of China where they didn't discuss Iran. It is in fact China that has the leverage. China is buying oil from Iran, almost all of the oil that Iran exports. China is providing Iran with ingredients for ballistic missiles. Russia has provided Iran with various types of military equipment in the past, but it's not very good. So if China were helping the US to solve this crisis, it would probably be more effective than anything that Putin can do.

[Luke Vargas]

Iran's mission to the United nations didn't respond to a request for comment. Israel's military has carried out strikes in the Lebanese capital Beirut, saying it was targeting an underground drone facility in the south of the city. It marks one of the largest strikes on Hezbollah assets since a ceasefire was agreed to in November. The military said that Hezbollah's aerial unit was producing thousands of drones with help and funding from Iran, Iran characterizing it as a blatant violation of the agreement between Israel and Lebanon. And at least three people have been killed and 49 injured in Russian missile and drone strikes across Ukraine. It comes just days after Kyiv's covert drone operation took out much of Russia's bomber fleet. The overnight assault hits sites across the country, with the capital Kyiv bearing the brunt of the attack. In news moving markets today, India's central bank delivered a larger than expected rate cut despite the ongoing uncertainty around US Tariffs. The Reserve bank of India's decision comes as cooling inflation and solid economic growth in India supported a continuation of an easing cycle which kicked off in February. The RBI also changed its monetary policy stance to accommodative. And amid an unsettled economic picture in many global capitals at the moment, London Mayor Sadiq Khan has been pitching the city as an ocean of calm, telling CNBC earlier this week that London is back. But deputy finance editor Quentin Webb says it's been a turbulent week for the city's stock exchange with news of several high profile exits.

[Quentin Webb]

Wise went public in London four years ago and having a fintech company wise is a kind of money trans company list here was seen as a bit of a win. Now this week the company said it's considering shifting its main listing to the US and that would feed into a broader exodus of companies from the London market. We've had other high profile companies choose to go public in the US Instead of the UK One being arm the semiconductor design company. Another is Klarna, which is a buy now, pay later provider which has been heading down the track towards a New York ipo.

[Luke Vargas]

The delistings come despite the UK being the first country to secure a trade deal with the US and amid longstanding economic issues with the OECD predicting weak economic growth for the UK this year and next. And that's it for what's news for this Friday morning. Today's show was produced by Daniel Bach and Kate Bullivant. Our supervising producer is Sandra Kilhoff and I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Otherwise, have a great weekend and thanks for listening.

[Lawrence Norman]

It.