Due to the fate of the $3.3 trillion "One Big Beautiful Bill," the former "First Buddy" relationship has completely collapsed: Musk lashed out on X, claiming the U.S. is now ruled by the "Porky Pig Party" and vowed to form a new political party if the bill passes; Donald Trump fired back, saying he would have the Department of Government Efficiency (DOGE) thoroughly investigate subsidies received by Tesla and SpaceX, even adding that he would “take a look” at sending Musk back to South Africa. With the war of words escalating, policy risks are spilling over, and Tesla’s stock continues to slide this week.

Flashpoint: The Bill Challenges Key Interests

On July 1, the Senate narrowly passed the One Big Beautiful Bill with a 51-50 vote. The bill extends tax cuts while slashing EV subsidies and adds approximately $3 trillion in new deficit spending. Musk responded with repeated attacks, calling it a “monster debt dragging down the future.” Trump defended the bill, claiming it would “Make America Great Again” and help curb inflation. The bill’s reduction of clean energy incentives directly impacts Tesla’s long-term profitability model, becoming the key trigger for the fallout between the two men.

Background: Rift, Reconciliation, and Renewed Clashes

After ending his 130-day term at DOGE on May 30, Musk began publicly criticizing the bill, claiming it would "accelerate America’s bankruptcy." On June 5, the two clashed on social media for the first time. After White House intervention, Musk posted on June 11 that he "regretted going too far," and Trump responded there was “no bad blood,” briefly suggesting reconciliation.

But the truce lasted less than three weeks. Musk resumed his online barrage, posting dozens of messages on X accusing lawmakers who support the bill of being “shameful” and calling the Republican Party the “PORKY PIG PARTY.” He warned that if the bill passes, he would launch the “America Party.” On July 1, Trump responded from the White House, calling Musk “the biggest subsidy recipient in history” and promising a “deep audit” from DOGE. When asked whether he would consider deporting Musk, who was born in South Africa but holds U.S. citizenship, Trump replied, “I don’t know,” then added, “We’ll have to take a look.” The mention of “deportation” immediately sparked a media frenzy.

Political Repercussions: Subsidy Audits and Contract Risks Rise Simultaneously

Trump’s hardline stance won praise from GOP hawks, but several Democratic lawmakers unexpectedly came to Musk’s defense, calling him a “champion of fiscal discipline.” Policy circles, however, are more concerned with tangible risks: SpaceX has over $22 billion in active defense and NASA contracts that could be subject to review. JPMorgan estimates the cancellation of EV tax credits could cut Tesla’s annual operating profit by up to 17%.

Market Reaction: Tesla Leads Declines as Risk Aversion Spreads

At 00:15 UTC on July 2, Tesla (TSLA) traded at $300.71, down approximately 11% for the week. Daily trading volume surged to 145 million shares—more than double the monthly average—setting a new monthly high.

(Image source: Google Finance)

Reuters data shows Tesla’s stock briefly plunged 5.5% after news of the bill's passage broke, dragging down Rivian and Lucid by 2% and 3.8%, respectively. A broader sell-off also unfolded in tandem: the KARS ETF, which tracks global EV stocks, fell 3.4% in a single day, and the Nasdaq retreated 0.9%. Over 14,000 put options for $320 expiring in July were traded, with implied volatility spiking to a two-month high as capital flowed sharply into the U.S. dollar and short-term Treasuries.

Outlook: “Black Swan” Risks Still Loom Large

Wall Street strategists broadly believe that as long as the bill, immigration status, and subsidy reviews remain active flashpoints, tensions between Trump and Musk are unlikely to cool in the near term. If the deportation threat evolves into formal hearings or contract freezes, Tesla may simultaneously lose both subsidy support and aerospace cash flow. Conversely, if the two sides call a temporary truce during the primaries or fundraising phase, market sentiment could stabilize and attract dip-buying capital.

How to Buy Tesla on uSMART

After logging into the uSMART HK app, click on "Search" at the top right of the page, input the stock code to access the details page and view transaction details and historical trends. Then click the "Trade" button at the bottom right, select option, fill in the transaction conditions, and submit your order.