Elon Musk with President Donald Trump during a joint news conference after Musk announced his departure from his role as a special government employee. Photo / Haiyun Jiang, the New York Times
After the relationship between United States President Donald Trump and Elon Musk exploded into warfare, Trump suggested that he might eliminate the tech titan’s federal contracts.
“The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts. I was always surprised that Biden didn’t do it,” Trump posted on his social media platform.
That’s not as easy as Trump implies.
The Pentagon and Nasa remain intensely reliant on SpaceX, Musk’s rocket launch and space-based communications company, to get to orbit and move government data across the world.
But there are options available to the President that could make Musk’s relationship with the federal Government much more difficult than it has been so far in Trump’s second Administration.
Trump’s most accessible weapon to punish Musk is the ability to instruct federal regulators to intensify oversight of his business operations, reversing a slowdown in regulatory actions that benefitted Musk’s businesses after Trump was elected.
“In an Administration that has defined itself by reducing regulation and oversight, it would not be difficult to selectively ramp up oversight again,” said Steven Schooner, a former White House contracts lawyer who is now a professor at George Washington University.
With a decree, Trump could suspend Musk’s security clearance, a step that the Trump Administration has also taken against some of its Biden-era critics. That move would make it harder for Musk to continue in his role as chief executive of SpaceX, given its billions of dollars in Pentagon contracts.
Pentagon investigators had been examining whether Musk has violated federal security clearance requirements for disclosing contacts with foreign government leaders, the New York Times reported last year.
The Trump Administration could also slow down new contracts going to SpaceX in the years to come, perhaps by looking for ways to drive more work to its rivals, such as Jeff Bezos’ Blue Origin or the Boeing and Lockheed partnership called United Launch Alliance.
But billions of dollars in financial commitments have been made to SpaceX for launches that will be spread out over the rest of Trump’s term to deliver astronauts and cargo to the International Space Station and even the moon, as well as to send military and spy satellites into orbit.
Moreover, the services SpaceX provides are vital to some of Trump’s top agenda items, such as building a new space-based missile defence programme that the Pentagon is calling Golden Dome.
That programme will require dozens of launches to orbit as well as space-based observation and data transmission systems to track and help intercept missile threats.
SpaceX is by far the dominant global player in these launches. While Blue Origin and other companies like Rocket Lab and Relativity Space are building or have recently built their own new rockets, none has the kind of launch record and reliability that SpaceX’s Falcon 9 rocket has.
Overall, the federal Government has awarded nearly US$18 billion ($30b) in contracts to SpaceX over the past decade, including US$3.8b just in the 2024 fiscal year, according to a tally by the New York Times.
That makes SpaceX one of the largest federal contractors, with most of that money coming from Nasa and the Pentagon.
Terminating SpaceX’s contracts “would end the US capability to launch astronauts to orbit for the foreseeable future”, said Laura Seward Forczyk, founder of the space consulting firm Astralytical.
It would also significantly delay the US effort to return humans to the moon, she said.
Bethany Stevens, Nasa’s press secretary, hinted on Musk’s X social platform – as the verbal war between Musk and Trump continued to play out – that the deals with SpaceX are in fact not going to be cancelled any time soon.
“Nasa will continue to execute upon the President’s vision for the future of space,” Stevens said, without mentioning Musk or SpaceX by name. “We will continue to work with our industry partners to ensure the President’s objectives in space are met.”
But Trump has more flexibility when it comes to the alphabet soup of federal agencies that regulate SpaceX as well as Tesla, Musk’s car company; X; the Boring Co., his underground drilling outfit; and Neuralink, his computer chip brain implant start-up.
The Trump Administration, including the Justice Department, has shown itself willing to take up investigations that target Trump’s enemies or organisations that he dislikes, like Harvard University or even his former aides who have become critics, like Chris Krebs, his former top cybersecurity official.
Before Trump was elected, at least 11 federal agencies had ongoing investigations or lawsuits targeting Musk’s companies.
These included the Federal Aviation Administration’s scrutiny of launch safety issues, the Environmental Protection Agency’s inquiry into potential water pollution at SpaceX’s Texas launch site, and transportation regulators’ questions about fatal accidents involving Tesla cars using autopilot.
Several of those inquiries were put on hold.
In other instances, fines that Musk’s companies had been assessed were being reconsidered, including one that the FAA announced in September for what it said were safety violations during launches in Florida.
Trump’s top transportation official vowed at his confirmation hearing to “review” that fine. As of last week, it had still not been paid, an agency official said.
The Fish and Wildlife Service also has slowed down its oversight of SpaceX’s Texas launch site, where the company for years has been accused of damaging adjacent state park and National Wildlife Refuge lands.
That enforcement effort could be turned back on almost overnight if Trump ordered it.
But no other US company can currently do what Nasa needs.
Boeing, the other company Nasa hired to take astronauts to orbit, has yet to complete fixes for its Starliner capsule after a test mission left two Nasa astronauts, Suni Williams and Butch Wilmore, in orbit for nine months before they finally returned to Earth in a SpaceX Crew Dragon.
Aerospace company Northrop Grumman also has a contract to take cargo to the space station with its Cygnus spacecraft, but the most recent Cygnus had to be scrapped after it was damaged during shipment to Florida for launch.
Nasa has hired a third company, Sierra Space of Louisville, Colorado, for cargo deliveries. But the company’s Dream Chaser space plane has yet to make its first flight.
SpaceX has also won contracts to launch many of Nasa’s most important science missions like Dragonfly, a nuclear-powered drone that is to fly around Saturn’s moon Titan.
Further complicating any attempt to kill Musk’s contracts is that agencies would likely still have to pay termination fees for the work, a cost that could rival that of simply buying the promised goods, Schooner said.
“It would be a bad idea,” he said.
Elon Musk appears to recognise this leverage he has over Nasa.
He initially threatened, as the war of words with Trump played out, to stop future flights to deliver astronauts to the space station, but he appeared to walk back that threat later in the day.
This article originally appeared in The New York Times.
Written by: Eric Lipton and Kenneth Chang
Photographs by: Haiyun Jiang
©2025 THE NEW YORK TIMES
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