Trump criticizes Musk's American Party as "just here to create chaos," Republican aides clash: "Let him roll back to South Africa"

Musk established the "American Party" to oppose the "Inflation Reduction Act," while Trump retaliated by threatening to cut subsidies, igniting new political and market turmoil. (Background: July Outlook: Trump’s Three Major Moves vs. Market Record Calm, is this month still "Summer Soft"?) (Background Supplement: Trump stated that tariff notification letters to 12 countries will be sent out next Monday, and Tsai Ing-wen emphasized protecting Taiwan's sensitive products, with negotiations ongoing.) Tesla (Tesla) CEO Musk announced yesterday on X the founding of the "American Party," directly targeting Republican lawmakers who support the "Inflation Reduction Act," and plans to seize key seats in the 2026 midterm elections, prompting President Trump to criticize the "third party as absurd" and threaten to withdraw federal subsidies for Tesla and SpaceX, leading to immediate political and capital tension. Tech Giants Challenge the Two-Party Framework Musk claimed that the traditional two parties are "wasteful and corrupt," equating to a one-party system. The poll he published on X gathered a total of 1.2 million votes, with 65% supporting "breaking free from the two parties." The new party aims to secure 2 to 3 seats in the Senate and 8 to 10 seats in the House, becoming a legislative "kingmaker." "The 'Inflation Reduction Act' is heading towards political suicide... The American Party is the solution." Musk's criticism highlights his dissatisfaction with the core content of the act that cancels electric vehicle and green energy subsidies, and the motivation for forming the party may be closely tied to corporate interests. Musk believes that the "Inflation Reduction Act" simultaneously promotes large tax cuts and spending on national defense and border security while also eliminating the $7,500 credit for each electric vehicle and widespread green energy subsidies. Analysts point out that once subsidies drop to zero, Tesla's earnings per share could be revised down by 12% to 15%. SpaceX also faces uncertainties regarding billions of dollars in subsidies and approximately $22 billion in defense and NASA contracts. Trump's Counteraction and Washington's Warnings On July 6, before returning to Washington, Trump first poured cold water on Musk's party creation, stating that a third party would find it hard to gain a foothold, and directly said Musk "is upset because subsidies are being cut," while simultaneously threatening to withdraw Tesla and SpaceX's government contracts. Investment firm Azoria Partners immediately halted funds linked to Tesla, and Treasury Secretary Basant also anticipates that the boards of the two companies will demand Musk focus on operations, reflecting the business circle's wariness towards uncertainty. I feel sad watching Musk go off the rails over the past five weeks, like a train wreck. He actually wants to form a third party, ignoring the reality that third parties have never succeeded in American politics... The only thing a third party creates is complete destruction and chaos. Trump's ally, former strategist Bannon: "Go back to South Africa" In response, far-right representative and Trump election ally Bannon directly attacked Musk on the podcast "War Room," reflecting the mainstream opinion within the White House. That clown, that idiot, Elmo the Mook, used to be called Musk, only foreigners would do such a thing. A non-American actually wants to establish the 'American Party'? Tesla's stock price fluctuated, and the implied volatility of options increased. Sectors like defense, renewable energy, and Bitcoin mining companies were also affected. Investors need to track congressional polling, the progress of bill negotiations, and the details of subsidy implementation. Although short-term uncertainty is high, stock prices ultimately depend on political chess moves and the innovative strength of Tesla and SpaceX. The direct confrontation between Musk and Trump has made the connections between American politics, technology, and capital markets even closer, adding unpredictable variables to the 2026 elections. Related Reports Trump stated that tariff notification letters to 12 countries will be sent out next Monday, and Tsai Ing-wen emphasized protecting Taiwan's sensitive products, with negotiations ongoing. July Outlook: Trump's Three Major Moves vs. Market Record Calm, is this month still "Summer Soft"? This article was first published in BlockTempo, the most influential Blockchain news media.