The Musk-Trump conflict threatens billions in SpaceX contracts and US space research goals
The ongoing Musk-Trump feud poses a significant threat to billions in SpaceX contracts and jeopardizes the United States’ objectives in space exploration. The recent confrontation between Elon Musk and Donald Trump on Thursday has intensified, moving from digital dialogues to possible tangible repercussions, jeopardizing a crucial segment of the US space initiative. Following Trump’s threat to terminate all federal contracts with Musk, thereby jeopardizing a crucial revenue stream for SpaceX, Musk responded by stating that he would decommission SpaceX’s Dragon spacecraft, which is responsible for transporting cargo and astronauts to the International Space Statio n for the United States. However, he subsequently seemed to retreat, as reported by Bloomberg. SpaceX, recognized as the foremost rocket launcher globally, possesses profitable contracts with the Pentagon for the launch of national security satellites and is in the process of developing a spacecraft intended to land American astronauts on the Moon within a two-year timeframe.
The recent escalation represents the latest chapter in an ongoing dispute that originated when Musk resigned from a brief position at the helm of the Trump administration’s Department of Government Efficiency (DOGE) and voiced criticism of significant aspects of Trump’s presidency, such as tax reforms and trade tariffs. While Musk expressed his discontent on his social media platform X, Trump responded during a meeting with the German Chancellor and through posts on his own site, Truth Social. Nevertheless, the inquiry persists as to whether either party will indeed follow through on their threats. The Bloomberg report cited a senior fellow at the Centre for Strategic and International Studies, who stated that terminating contracts with SpaceX would initiate a domino effect impacting numerous essential US government operations, particularly within the Pentagon and NASA. “At this moment, no other company can offer what SpaceX delivers,” he stated.
SpaceX, with a valuation nearing $350 billion, stands as one of the globe’s most valuable start-ups, having obtained more than $22 billion in unclassified contracts from the Department of Defense and NASA since the year 2000. Nasa has granted SpaceX nearly $4 billion to assist in the landing of US astronauts on the Moon. The agency has become increasingly reliant on SpaceX’s Dragon spacecraft for missions to the International Space Station, especially in light of the delays associated with Boeing’s Starliner programme. SpaceX possesses a $843 million contract to ensure the safe decommissioning of the ISS upon the conclusion of its mission. Earlier this week, Musk disclosed that SpaceX generated around $1.1 billion from NASA contracts in 2025 alone.
The report indicates that a Nasa spokesperson has affirmed the agency’s commitment to advancing the President’s space goals while collaborating with industry partners to realize those aims. SpaceX’s Starlink satellite internet service, which offers broadband access to rural regions and has contracts with the Pentagon, may also be at risk. Peter Hays, a professorial lecturer at George Washington University’s Space Policy Institute, states, “Musk has launched more satellites than the rest of the world combined.” It would not be straightforward to sever connections with him.
SpaceX, in conjunction with Boeing, Lockheed Martin’s United Launch Alliance (ULA), and soon Blue Origin, is instrumental in the execution of US national security missions, which encompass the deployment of surveillance satellites for the Pentagon. Nonetheless, Blue Origin has only recently unveiled its New Glenn rocket, while ULA continues to face challenges in boosting its launch capacity, resulting in a significant dependence of the Space Force and the National Reconnaissance Office on SpaceX. The report cited Todd Harrison, a senior fellow at the American Enterprise Institute, stating, “They can’t really cut off SpaceX without having a severe impact on the military space capabilities.” Harrison suggests that the discord between Trump and Musk may have implications for the future of the Golden Dome missile defence system. Should the administration opt for a design that relies less on space technology, it is likely that SpaceX will encounter a reduction in contract opportunities. “This dispute could influence the final design choices for the Golden Dome system,” he stated.
Legal authority and challenges to contract cancellation. The question of whether Trump possesses the authority to unilaterally cancel contracts or revoke subsidies awarded to SpaceX remains unresolved. Contract awards and cancellations should ideally remain insulated from political pressures. Should the President follow through on his threats, SpaceX may have grounds to pursue legal action for breach of contract. Even if the administration attempts to terminate the contract via standard procedures, the public statements made by the President may offer a basis for contesting the termination.
Ending federal contracts incurs significant expenses and carries political ramifications. Most contracts contain a “termination for convenience” clause; however, invoking this provision frequently necessitates that the government compensates contractors for billions of dollars in incurred expenses. Furthermore, it is only designated contracting officers, rather than the President, who possess the legal authority to sign or cancel federal contracts, as stated in a Bloomberg report. The report cited Caryn Schenewerk, a consultant in the space industry and law professor at Georgetown University, who previously held a position at SpaceX, asserting, “You can’t just flip a switch.” “There are established procedures and responsibilities that must be followed to cancel contracts.” Inadequate management of contract cancellations may subject the government to additional legal disputes, particularly in light of Musk’s track record of litigation. In 2014, Musk initiated legal action against the Air Force to enable SpaceX to vie for national security satellite launches, but he subsequently withdrew the lawsuit when the Air Force made the contract available for competition.
