In a surprising development that has sent ripples through both political and business circles, the once-solid alliance between Tesla CEO Elon Musk and President Donald Trump appears to be showing significant cracks over the administration's aggressive new tariff policies. Reports from multiple sources reveal that Musk personally appealed to Trump to reverse the sweeping tariff increases—marking what Reuters has called "the highest profile disagreement between the President and Musk" since Trump's return to the White House.
The Tariff Policy That Shook Markets
President Trump recently unveiled what many economists consider the most aggressive tariff policy in over a century. The measures include a 10% baseline tariff on all imports to the United States, with significantly higher duties imposed on dozens of countries—reaching up to 50% for some nations The Independent1. The White House justified these measures in a fact sheet stating this was necessary to "increase our competitive edge, protect our sovereignty, and strengthen our national and economic security" White House2.
The announcement triggered immediate and severe market reactions. The three major U.S. stock indices—the Dow Jones Industrial Average, S&P 500, and Nasdaq—plummeted by more than 5% in the week following the announcement, marking the most significant stock market drop since the COVID-19 pandemic in 2020 Al Jazeera3.
Musk's Private Appeal and Public Stance
According to reports by The Washington Post, cited by multiple news outlets, Musk made direct yet unsuccessful appeals to President Trump over the past weekend to reverse the tariff measures. The Tesla CEO, who has been serving as an advisor to Trump and overseeing the Department of Government Efficiency (DOGE), went beyond private lobbying efforts.
Publicly, Musk advocated for a dramatically different approach. During a virtual conversation with Italian Deputy Prime Minister Matteo Salvini, he expressed hope for "a zero-tariff situation" between the U.S. and Europe—a position fundamentally at odds with Trump's protectionist stance Reuters4.
Musk also took to social media to make his case, sharing educational content about the benefits of free trade, including a video of economist Milton Friedman explaining international trade cooperation The Independent1.
The Tesla Factor
Musk's opposition to tariffs is not new—he has consistently maintained this position since Trump's first term. However, the current situation has particular significance for Tesla, which has already been experiencing business challenges. The company warned the U.S. government about the negative impacts of tariffs last month, with Musk writing on his social media platform X: "Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant." Al Jazeera3.
The consequences have been material. Tesla has seen its quarterly sales drop sharply, and its shares are trading at $233.29 as of last Monday, down over 42% since the beginning of the year Reuters4. In Europe, Tesla's sales plunged by 49% in January and February compared to the same period in 2024 Al Jazeera3.
Administration Divided
The dispute between Musk and Trump has highlighted broader divisions within the administration over trade policy. Peter Navarro, Trump's longtime aide and senior counselor for trade and manufacturing, has publicly defended the tariffs and sparred with Musk.
After Musk criticized Navarro's economics credentials—stating that "A PhD in Econ from Harvard is a bad thing, not a good thing"—Navarro responded on Fox News: "It was interesting to hear Elon Musk talk about a zero-tariff zone with Europe. He doesn't understand that. The thing that I think is important about Elon to understand is he sells cars. That's what he does." Al Jazeera3.
Navarro remains bullish on the tariffs' long-term impact, predicting: "The market will find a bottom. It will be soon, and from there, we're going to have a bullish boom, and the Dow is going to hit 50,000 during Trump's term."
Broader Tech Industry Impact
The impact of Trump's tariff policy extends well beyond Tesla to the entire tech industry. Apple and Nvidia, two of the five most valuable companies in the world, have seen their share prices drop by double digits. Valuable startups like Klarna and Stubhub have postponed their anticipated initial public offerings due to market turbulence The Guardian5.
These developments are particularly notable given that many tech leaders had supported Trump. As The Guardian notes, "Tech bet big on Trump. Its foremost delegates, the richest men in the world, sat with him and his family during his inauguration." Now, these same leaders are facing the consequences of policies that run counter to their business interests.
The Future of the Musk-Trump Relationship
Despite this high-profile disagreement, there are few signs of a complete rupture in the relationship between Musk and Trump. The president has repeatedly defended Musk, and there have been little public indications of animosity between the two men The Guardian5.
Both Trump and Vice President JD Vance have stated in interviews that Musk would eventually leave his formal administration role. However, reports suggest Musk "appears set to keep his close ties with the president and retain the wealth, influence and intent to shape the country's politics" The Guardian5.
Economic Outlook
Economists have raised significant concerns about the long-term impact of the tariffs. Many predict they could reignite inflation, raise the risk of a U.S. recession, and boost costs for the average U.S. family by thousands of dollars—a potential liability for a president who campaigned on a promise to bring down the cost of living Reuters4.
Meanwhile, Treasury Secretary Scott Bessent told NBC's Meet The Press that more than 50 countries had reached out to Washington for negotiations to cut the levies, suggesting potential adjustments to the policy may be forthcoming Al Jazeera3.
Conclusion
The rift between Musk and Trump over tariff policy reveals the complex interplay between economic ideology, business interests, and political relationships. As Musk continues to advocate for free trade while Trump maintains his protectionist stance, the global economy hangs in the balance, with markets responding nervously to each development.
Whether this disagreement represents a temporary bump in their relationship or signals a more fundamental divergence in their visions for America's economic future remains to be seen. What is clear, however, is that even the closest allies of the president are not immune to the far-reaching consequences of his bold economic policies.
As one of the world's richest men and a key figure in American business and politics, Musk's break with Trump on tariffs demonstrates that even in an era of strong political allegiances, economic realities can still force powerful voices to speak out against policies they believe threaten prosperity—even when those policies come from their own political allies.
