Trump Won’t Cut Musk’s Subsidies Amid $200M AI Deal

- Trump to maintain Musk’s federal subsidies despite feud - Musk’s xAI among firms in $200 million Pentagon AI deal On July 24, 2025, a post on Truth Social by President Donald Trump stated that he will not cancel federal subsidies for Elon Musk’s companies. His statement resolved weeks of uncertainty that followed his earlier suggestion to cut federal funding after Musk publicly criticized one of the President’s key legislative initiatives. According to a Bloomberg report on July 24, Trump’s announcement followed a new federal contract for Musk’s artificial intelligence company, xAI. Earlier in July, the Department of Defense granted contracts worth up to $200 million to xAI, Google, OpenAI, and Anthropic. These contracts aim to bolster the Pentagon’s AI capabilities, representing a significant federal investment in advanced technology. This change in stance follows escalating tensions between the two men. After Musk criticized a pivotal legislative proposal from Trump, Reuters reported the President suggested cutting the funding would be the “easiest way to save money in our Budget, Billions and Billions of Dollars.” His recent Truth Social post, however, reversed this position, assuring that the subsidies will remain. Meanwhile, on July 23, White House Press Secretary Karoline Leavitt added to the uncertainty. She expressed skepticism about federal agencies contracting with xAI, despite Trump’s support, and stated she would discuss the matter with the President. This indicated potential internal disagreements over Musk’s role in future government technology collaborations. Despite Trump’s latest assurance, this mixed messaging creates uncertainty, and it remains unclear how Musk’s companies will navigate federal contracts and subsidies moving forward.