Elon Musk and Donald Trump’s Biggest Obstacle in Their Alliance May Be Each Other

Key Takeaways

• Elon Musk has emerged as an influential voice in President-Elect Trump’s orbit.
• However, the two men don’t agree on everything.
• Potential areas of conflict include federal spending, tariffs, and environmental issues.

With the news that Donald Trump will appoint Elon Musk to lead a new department of government efficiency, many have started to speculate about what changes Musk could push through.

But the two men don’t exactly see eye-to-eye on some crucial issues. And without an official cabinet role (the new department will only act in an advisory capacity), Musk’s influence on government policy may be limited.

Musk and Ramaswamy To Advise on Federal Cost-Cutting

In a statement on Tuesday, Nov. 12, Trump said he would appoint Musk and former Republican presidential candidate Vivek Ramaswamy to offer the White House “advice and guidance” on cost-cutting measures.

While forming a new government agency would require an Act of Congress, the external department will partner with the White House Office of Management and Budget to implement its recommendations, the statement said.

Trump stated that the new department would have a remit to “dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure federal agencies. ”

U.S. Budget Battles Loom

Although Musk has said he plans to cut $2 trillion from the federal budget, moves to curtail public spending could undermine Trump’s economic agenda.

The President-Elect’s official 2024 platform promised to “protect Social Security and Medicare with no cuts.”

Likewise, since campaigning to scrap the Affordable Care Act in 2016, Trump has u-turned on the popular healthcare subsidization scheme, which he now says  he supports.

Of course, Musk isn’t the only one seeking a massive reduction in federal spending.

Shrinking the government has been a Republican goal for generations, and hardliners in Congress will also want to push for drastic cuts. But if they go too far, Republicans risk alienating the working-class voters who handed them their decisive victories this month.

Shrinking the Deficit

In recent comments , Musk has been severely critical of the government’s ballooning debt and called for actions to reduce the budget deficit

In his rhetoric, Trump has also advocated for reducing the deficit. However, his first-term record tells a different story.

The Manhattan Institute estimates  that in four years, Trump signed legislation and approved executive actions costing $7.8 trillion over a decade.

President Obama and President Bush incurred $5.0 trillion and $6.9 trillion in equivalent costs, respectively, and they served two terms each.

The largest driver of Trump’s record budget deficit was pandemic relief, which cost the government $3.9 trillion. Meanwhile, tax cuts cost $2.0 trillion. The rest of the increase was mostly fueled by raising the government’s discretionary spending caps.

Ultimately, Trump left the White House with the largest peacetime budget deficit in American history and a national debt exceeding 100% of the economy for the first time since World War II.

Given the Tesla CEO’s ruthless business record, mass layoffs are widely expected across the government. But there is no silver bullet for the problem of government spending.

Some of Ramaswamy’s more radical proposals, like disbanding the FBI,  would need Congressional approval, yet they run against decades of conservative orthodoxy and would be difficult to push through.

Ultimately, the chances of balancing the government’s books look slim without increasing taxes or slashing Social Security and Medicare, which Trump has vowed not to do.

Free Trade vs. America First

In the America First ideology of Trumpism, tariffs are posited as a non-tax that will dramatically increase the government’s income.

Tariffs enacted during Trump’s previous term and continued by Biden have added tens of billions of dollars per year to federal revenues. However, they remain a drop in the ocean compared to tax income.

Meanwhile, proponents of free trade argue that tariffs on imported goods ultimately drive up prices and limit consumer choice.

In his comments  on the matter, Musk has been a fierce opponent of the policy, even opposing Biden’s tariffs on Chinese electric vehicles, which are widely viewed to have benefited Tesla.

“Neither Tesla nor I asked for these tariffs,” he stated at the time, “things that inhibit freedom of exchange or distort the market are not good.”

Climate Change Disagreements

Besides Trump’s protectionist economic agenda, the environment is another area where the incoming president could clash with Musk.

In 2017, the businessman famously quit two presidential councils he served on over Trump’s decision to withdraw from the Paris climate agreement.

In 2024, however, it’s hard to imagine the self-proclaimed  “first buddy” throwing away the influential position he has worked so hard for if Trump withdraws from the agreement a second time.

The Tesla CEO alienated many environmentalists earlier this year when he failed to stand up to Trump’s denial of climate science during an interview.

Instead, Musk took the opportunity to present himself as “pretty moderate” on energy while insisting that “it’s not like the house is on fire immediately.”

Nevertheless, Musk has avoided lapsing into total climate denialism. And while he may have toned down his rhetoric on the urgency of transitioning away from fossil fuels, he remains a proponent of clean energy and decarbonization.