Trump Softens Stance on Musk, xAI Federal Contracts

President Donald Trump has shifted from threatening to revoke federal subsidies and contracts with Elon Musk's companies, including Tesla and xAI, to publicly stating that he wants Musk and all American businesses to 'thrive.' Despite this change in tone, the administration still expresses skepticism about federal agencies contracting with Musk's AI company, with the possibility of contract cancellations remaining. This policy uncertainty coincides with Tesla reporting a 12% drop in revenue and a 16% decline in profits, partly due to lost EV tax credits and new tariffs in Trump's budget bill. Musk has criticized Trump's spending policies, though he later softened his comments. Ongoing tensions between Trump and Musk have unsettled investors and cast doubt on future federal support for Musk's ventures. Trump's latest remarks appear aimed at de-escalating their feud and reassuring the business community.