Musk-Trump split risks $22bn SpaceX contracts, shakes U.S. space program
The dispute originated from Musk’s recent criticism of Trump’s tax-cut and spending policies, which escalated rapidly.
Approximately $22 billion (around Sh2.8 trillion) worth of SpaceX’s government contracts are now at risk, with several U.S. space programs potentially facing major disruptions following a heated conflict between Elon Musk and President Donald Trump on Thursday.
The dispute originated from Musk’s recent criticism of Trump’s tax-cut and spending policies, which escalated rapidly.
Trump responded sharply during an Oval Office address, and Musk retaliated with a series of posts on X, prompting Trump to threaten the cancellation of government contracts with Musk’s companies.
Taking the warnings seriously, Musk announced plans to start "decommissioning" SpaceX’s Dragon spacecraft, which is used by NASA.
However, just hours later, Musk seemed to backtrack.
After a follower on X suggested that he and Trump should "cool off and take a step back for a couple of days," Musk replied, "Good advice. Ok, we won't decommission Dragon."
Musk’s threat to suddenly withdraw the Dragon spacecraft from service marked an unprecedented move by one of NASA’s top commercial partners.
Under a contract valued at around $5 billion, the Dragon capsule serves as NASA’s only American vehicle capable of ferrying astronauts to and from the International Space Station, making SpaceX a vital player in the U.S. space program.
The dispute sparked concerns about how far Trump known for his unpredictable interventions in procurement, might go to retaliate against Musk, who until recently led Trump’s effort to reduce federal government size.
If Trump follows through on canceling billions in contracts with NASA and the Department of Defense, it could significantly hinder the pace of U.S. space exploration.
While NASA press secretary Bethany Stevens declined to comment specifically on SpaceX, she affirmed, “We will continue to work with our industry partners to ensure the president’s space objectives are achieved.”
The clash between Musk and Trump shattered a rare alliance between a U.S. president and a leading industry figure, which had delivered significant benefits for SpaceX including a proposed shift from NASA’s moon missions toward Mars exploration, a planned initiative to develop a massive missile defense system in space, and the appointment of an Air Force official who supported SpaceX in a major contract decision.
Removing the Dragon spacecraft from operation could significantly impact the International Space Station program, a collaboration involving dozens of countries based on a 20-year-old agreement.
However, the timeline for such a decommissioning remained uncertain. Meanwhile, NASA relies on Russia’s Soyuz spacecraft as a backup transportation option for astronauts traveling to the ISS.
SpaceX had already established its dominance in the rocket launch and satellite communications sectors well before Musk’s entry into Republican politics last year.
Analysts say this strong market position could offer some protection against the fallout from Musk’s fallout with Trump.
“It likely wouldn’t be catastrophic, as SpaceX has grown into a global leader in much of the space industry, but it would undoubtedly lead to substantial revenue losses and missed contract opportunities,” explained Justus Parmar, CEO of SpaceX investor Fortuna Investments.
In recent months under Trump’s leadership, the U.S. space sector and NASA’s workforce of 18,000 have faced uncertainty amid looming layoffs and proposed budget cuts that could eliminate numerous science programs. Meanwhile, NASA continues to operate without a confirmed administrator.
Jared Isaacman, a billionaire private astronaut and Musk ally, was Trump’s pick to lead NASA.
However, he was abruptly removed from consideration by the White House over the weekend, a move seen as a direct consequence of Musk’s falling out with the president, denying Musk his preferred candidate to head the agency.
On Thursday, Trump justified dropping Isaacman by calling him “totally Democrat,” likely referring to reports of Isaacman’s political donations.
Public records show Isaacman has contributed to both Republican and Democratic candidates, though predominantly to Democrats.
Musk’s vision to send humans to Mars has been a cornerstone of Trump’s space agenda. This focus has, however, risked diverting resources away from NASA’s flagship Artemis program aimed at returning humans to the moon.
Trump’s budget blueprint proposed canceling Artemis missions beyond the third flight, effectively halting the costly Space Launch System (SLS) rocket designed for these missions.
Yet, the Senate Commerce Committee’s version of the budget, unveiled late Thursday, would restore funding for the fourth and fifth Artemis missions, allocating at least $1 billion annually for the SLS through 2029.
Given that SpaceX’s rockets offer a more cost-effective alternative to the SLS, the Trump administration’s stance on the Senate’s revisions in the coming weeks will reveal how much political influence Musk still wields.
Founded in 2002, SpaceX has secured $15 billion in NASA contracts for its Falcon 9 rockets and the development of Starship, a versatile rocket intended to transport NASA astronauts to the moon this decade.
The company has also won billions in Pentagon contracts to launch most of the U.S. military’s national security satellites, while building an extensive spy satellite network for a U.S. intelligence agency.
Former NASA Deputy Administrator Lori Garver noted that canceling SpaceX’s contracts would likely be illegal and not in the national interest.
Still, she warned, "A rogue CEO threatening to decommission spacecraft, putting astronauts’ lives at risk, is untenable."
