The "big drama" in American politics has escalated once again. Following Elon Musk's public criticism of the "Beautiful Law" promoted by Trump and his threat to establish the "American Party," President Trump strongly retaliated on July 1, hinting at the possibility of "expelling" Musk and calling for the Department of Efficiency to investigate the government subsidies received by Musk's companies. This high-level political dispute quickly spread to the market, leading to a sharp decline in Tesla's stock price and the meme coin TRUMP associated with Trump. This not only reveals the complex relationship between politics and business but also demonstrates the significant impact of political rhetoric on financial assets.
On July 1, in response to Musk's recent posts attacking the "Beautiful Law," Trump told reporters at the White House that he might consider "expelling Musk." He further stated that the Department of Efficiency should thoroughly investigate the government subsidies received by Tesla and SpaceX, which Musk operates.
Trump's remarks were filled with threats: "I don't know. We have to think about it. We might have the Department of Efficiency keep an eye on Musk. You know what the Department of Efficiency is, right? It's the monster that could potentially come back and eat Musk."
Trump accused Musk of attacking the "Beautiful Law" because the law eliminated subsidies for new energy vehicles, which would significantly impact Tesla. He even stated on social media: "So far, the subsidies Musk has received from the (U.S. government) may be more than anyone in history, and without those subsidies, he would likely have to shut down his business and return to South Africa."
Previously, on June 30, Musk harshly criticized the "Beautiful Law," claiming it would raise the debt ceiling by a record $5 trillion and threatening to establish the "American Party" the day after the bill passed. Musk had served as the head of the Department of Efficiency under Trump, but their relationship soured over issues like the "Beautiful Law," with Trump calling Musk "crazy" and Musk labeling Trump "ungrateful." This dispute reflects not only policy differences but also personal grievances.
Trump's comments immediately triggered a chain reaction in the market.
Tesla's stock price came under pressure: According to CNBC, Tesla's stock fell sharply by 5.34% on Tuesday. Musk's other ventures, including SpaceX and Starlink, also heavily rely on government policy support, making Trump's threats even more damaging and raising investor concerns about potential government scrutiny and subsidy cuts for Tesla in the future.
The TRUMP meme coin was not spared: The meme coin TRUMP, associated with Trump, also plummeted by over 8% on July 2. This demonstrates the market's sensitivity to political uncertainty and the characteristic of meme coins being influenced by celebrity statements. Although the drop in the TRUMP meme coin may be related to the overall performance of Trump's personal cryptocurrency portfolio (which reportedly fell over 78% in value from $10.16 million to $2.2 million by early 2025), this decline is undoubtedly directly related to the public conflict between Trump and Musk.
Notably, the holdings of the decentralized finance platform World Liberty Financial (WLFI), closely linked to Trump's inner circle, surged against the trend, growing from $72.8 million to $178.1 million in the first half of this year. This reflects a broader shift in the cryptocurrency market—from speculation-driven meme coins to more strategically diversified holdings, or in other words, cryptocurrency projects more closely tied to actual political influence.
The public conflict between Trump and Musk once again confirms the significant influence of political rhetoric on the market, especially on the highly volatile cryptocurrency market.
Celebrity effect and meme coins: Meme coins often heavily rely on the statements and attention of celebrities. As a former president, Trump's every word and action can directly impact the prices of meme coins associated with him. The drop in the TRUMP meme coin is a manifestation of this double-edged sword of celebrity effect.
Policy risk and corporate prospects: For companies like Tesla that heavily depend on policy support (such as new energy subsidies), statements from high-level government officials can directly affect their future development expectations, which in turn reflects in stock prices.
The politicization of cryptocurrency: As cryptocurrency increasingly integrates into mainstream finance and politics, interactions between political figures, policymakers, and the cryptocurrency space will become more frequent. These interactions can bring both opportunities (such as the crypto tax reform provisions proposed by Lummis) and risks (such as market volatility triggered by political statements).
Trump's threat to "expel" Musk and his call for an investigation into the subsidies received by his companies is the latest reflection of the complex interplay between American politics and business, traditional finance and the emerging crypto world. The simultaneous plunge of Tesla's stock price and the TRUMP meme coin vividly illustrates the significant impact of political uncertainty on market sentiment and asset prices. In the future, as cryptocurrency plays an increasingly important role in the global economic and political landscape, investors will need to pay closer attention to political dynamics and carefully assess the risks and opportunities they may pose to crypto assets.
Related: Musk threatens to establish the "American Party"! The fate of Trump's "Beautiful Law" and crypto tax reform intertwined.
Original article: “Trump Threatens to Expel Musk: Tesla Stock and TRUMP Meme Coin Plunge Amid Political Market Clash”
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