On November 12, 2024, the elected U.S. President Donald Trump announced the appointment of billionaire and Tesla CEO Elon Musk, alongside businessman Vivek Ramaswamy, to head the newly established Department of “Government Efficiency.” This marks a significant shift in the relationship between the U.S. government and American private sector giants, as Musk is considered one of the most influential figures in technology and business, thus placing him in a position to directly impact federal government operations. Simultaneously, this role, tasked with reducing federal spending and streamlining bureaucratic processes, raises questions about the boundaries between government and private institutions, particularly since Musk’s companies—Tesla, SpaceX, and others—would benefit from the deregulations and budget reforms that his team would advocate.
Following Trump’s electoral victory, discussions intensified in American and global circles about Elon Musk’s potential role in the new U.S. administration, especially given that he already shares the incoming president’s enthusiasm and desires for deregulation, particularly concerning social media platforms. Musk’s potential role can be summarized in the following points:
Reducing Federal Spending: In his statement on November 12, 2024, Trump indicated that “these two great Americans (Musk and Ramaswamy) will pave the way for my administration to dismantle government bureaucracy, reduce excessive regulations, cut unnecessary expenses, and restructure federal agencies.” Therefore, Musk’s role will certainly extend beyond traditional advisory positions to encompass an official, albeit somewhat unconventional, position, given that this new administration will not be a governmental agency. Trump stated that Musk and Ramaswamy will work outside the government to provide advice and guidance to the White House; this would involve eliminating waste, inefficiency, and redundant regulatory frameworks across various federal agencies, allowing the businessman to operate freely while bypassing some ethical regulations and conflicts of interest typically faced by federal employees.
This vision has been publicly supported by Musk, who has called for a smaller government and significant regulatory cuts; this was evident in his promises to reduce federal spending by as much as two trillion dollars, citing his experience in cutting costs within his private companies, especially with the restructuring of “X” (formerly Twitter). He explicitly stated that reducing government spending would target excessive programs, bureaucratic structures, and excessive payments within the federal government’s annual budget of approximately 6.75 trillion dollars in 2024. Conversely, his declared goal has met skepticism from economic experts, who argue that achieving cuts on this scale will be difficult without impacting essential social and defense programs. For instance, former Treasury Secretary Larry Summers pointed out at an economic club in New York that “Musk would be lucky to reduce the federal budget by 200 billion dollars, as the scope for eliminating waste is limited.”
Increased Involvement in U.S. Foreign Policy: Many experts expect Elon Musk to play a role in influencing U.S. foreign policy; this is backed by his participation in phone calls with world leaders with the elected president, including a call with Ukrainian President Volodymyr Zelensky to discuss the ongoing war there. Since the outbreak of the war between Russia and Ukraine, Musk provided Starlink satellite service to Ukraine to help it maintain internet connectivity, but later refused to allow Ukraine to use this service for a surprise attack on Russian ships in 2022. Additionally, Musk has faced sharp criticism due to reports of his regular communications with Russian President “Putin,” coinciding with reports suggesting that Russian forces might access Starlink satellites. Musk has denied these claims, but it is not coincidental that allegations suggest a close relationship between Trump and Putin, as the former has expressed a desire to end the war quickly, criticizing the extent of U.S. support for Ukraine.
Potential Intervention in U.S. Space and Defense Policies: With Musk at the helm of SpaceX, his engagement in American politics may have far-reaching effects on U.S. space and defense policies; Musk’s ambitions with SpaceX align with Trump’s “America First” strategy, and thus his influence could facilitate federal contracts and increase funding for defense technologies, such as the Starlink satellite program. This trend may lead the U.S. government to rely more heavily on private sector solutions offered by Musk, potentially resulting in fundamental changes to the collaboration mechanisms between defense contractors and federal agencies, especially since SpaceX already holds significant contracts with the Department of Defense. Some Pentagon officials have expressed concerns about their overreliance on the company for rocket launches. According to Scott Amey, general counsel at the Project on Government Oversight, Musk’s strong ties with the White House could be advantageous for both Tesla and SpaceX, heightening concerns about suboptimal decisions for taxpayers.
Establishing Stricter Standards for Artificial Intelligence: During the Web Summit in Lisbon from November 11-14, 2024, researcher Timnit Gebru explained that Elon Musk might seek to influence Trump to introduce standards that limit the development of “general artificial intelligence”; this may require Musk to exert further efforts to convince Trump to take this step, particularly since Trump previously expressed his desire to overturn Biden’s 2023 executive order requiring companies to tighten safety standards for AI mechanisms and programs, asserting the need to outpace China, which could make him supportive of Musk’s policies granting competitive advantages to American tech firms. However, if Musk reaches the unique position that allows him to shape national rules related to artificial intelligence, he is likely to want to use this position to implement his ideology focusing on mitigating AI risks, which could benefit his competitors as much as it aids American companies, particularly his own.
Leveraging Social Media to Support Trump: As the owner of “X,” Musk serves as a driving force for Trump’s administration in public relations; he has previously used the platform to shape political discourse, promote transparency, and encourage public discussion about spending policies and government reforms, even rallying American public opinion behind Donald Trump before the elections. Furthermore, Musk has promised that the Department of “Government Efficiency” will be fully transparent by providing regular updates on the administration’s work on “X,” enabling citizens to track spending cuts and review the performance of his administration, aiming to increase public oversight, although some view this step as also benefiting Musk personally by boosting his social media followers and promoting his ideological views. Additionally, Musk’s prominent presence on social media is likely to amplify Trump’s political initiatives and bolster support among tech enthusiasts, especially younger liberal-minded individuals who believe in individual freedoms and a reduction in government involvement. However, Musk’s activity on social media may also heighten political polarization, particularly on contentious issues such as freedom of speech.
Adopting Consistent Positions with Trump on Immigration Issues: While Trump proposes mass deportations, ending birthright citizenship for children of undocumented parents, deporting protesting foreign students supporting Palestinians and canceling their visas, eliminating humanitarian parole, and adding “ideological screening,” while limiting automatic green card grants to non-Americans graduating from American colleges and universities, Elon Musk—who was born in South Africa—frequently shares anti-immigration content on “X,” including conspiracy theories regarding election fraud; for instance, he previously stated, “As an immigrant, I am pro-immigrant. I just want to ensure that the people who come here will be assets to society,” although he has not explicitly stated his opinion on Trump’s calls for mass deportation.
Encouraging Trump to Raise Tariffs: Despite Musk’s reservations regarding tariffs on Chinese electric cars, at a Trump rally, he highlighted the need for such tariffs to enable Tesla to compete against Chinese automakers flooding the American market, aligning with Trump’s long-standing policy advocating for high tariffs; during his presidential campaign, Trump announced his intention to impose tariffs of up to 60% on Chinese imports, including cars, while ending previous trade agreements and implementing comprehensive tariffs on most foreign imports, which could reach 10%.
Potential Implications
Without a doubt, Elon Musk’s political and economic rise during Donald Trump’s second term will bring about several potential implications, the most significant of which include:
Threat to Musk’s Businesses in China: Musk could face multiple business threats if trade tensions between the U.S. and China escalate under Trump’s administration, especially as economic nationalism is set to be a key point in his presidency, with promises of raising tariffs on imports by 10%, particularly on Chinese goods by up to 60%. This will significantly impact Tesla’s factories in China, which account for 40% of the company’s production capacity. Moreover, the Chinese market is one of the most prominent for Tesla, contributing more than one-fifth of the company’s revenues in 2023. While Musk has maintained close relationships with Chinese officials, trade pressures could play a pivotal role in his relationship with the Chinese government, which might leverage its influence over him amid rising U.S.-China tensions, potentially turning Musk into a bargaining chip between the two governments, particularly if Trump attempts to weaken these ties or use Musk as a means to increase pressure on Beijing.
Maximizing Musk’s Financial and Business Wealth: Musk’s partnership with Trump is expected to provide substantial benefits for his companies; having spent at least 132millionontheelectedpresident′scampaign,heswiftlyreapedtheprofitsofTrump′selectoralvictory,withTesla′smarketvaluesoaringby25132millionontheelectedpresident′scampaign,heswiftlyreapedtheprofitsofTrump′selectoralvictory,withTesla′smarketvaluesoaringby2550 billion, elevating it to over $300 billion. His companies are also likely to gain additional opportunities under the Trump administration due to favorable policies, such as tax breaks, easing of regulatory restrictions, in addition to federal support for major projects like renewable energy initiatives. This type of financial and political backing could lead to a significant increase in Musk’s personal wealth, particularly if Tesla’s stock continues to rise, as seen after Trump’s victory.
Development of Musk’s Political Aspirations: If Musk successfully enhances his position within the Trump administration, he may be prepared to engage in politics more directly, particularly as he assumes a significant role in areas like reducing government spending or supporting private projects; this could open doors for him to play larger roles in future politics, perhaps even taking on a higher position in upcoming administrations. Furthermore, Trump’s election victory has afforded Musk considerable leverage; he is the only individual who has managed to influence Trump’s political choices and secure a prominent role in the new administration. During Trump’s victory speech, Musk was described as a “new star,” followed by Musk announcing his plans to support Republican candidates in the 2026 midterm elections and beyond.
Potential Political Criticism of Trump’s Administration: While Musk’s support bolsters Trump’s credibility in some areas, it could also risk exacerbating existing divisions among voters; Musk’s polarizing reputation might alienate moderate or liberal supporters who could view his role as indicative of an excessive government reliance on private sector interests. Additionally, Musk’s controversial presence on social media may pose challenges for Trump’s public relations team, particularly if Musk’s statements on “X” provoke backlash or undermine Trump’s messages. What may deepen the potential political divide among voters is Musk’s relatively low popularity; a survey conducted by NBC News in late September 2024 indicated that he only held a 34% approval rating. Moreover, to fulfill Musk’s promise of cutting more than two trillion dollars from the federal budget, Trump would likely have to propose cuts to social safety net programs and some of the more popular government initiatives, which would inevitably attract fierce opposition—not just from Democrats, but also from Republicans who wish to ensure public support in the upcoming elections.
In conclusion, Elon Musk’s potential role within the Trump administration represents a unique opportunity for the private sector to expand its influence within the federal government, particularly as Musk’s role may resemble that of another tech mogul, Peter Thiel, who supported Trump eight years ago. By integrating Musk into his administration, Trump may establish a model for future presidents seeking to leverage private sector expertise to address governmental inefficiencies; this approach could transform public expectations regarding government roles, making private sector involvement in federal policy-making more normative. However, this legacy may also carry the risk of encouraging conflicts of interest, particularly if future administrations aim to combat the legacy left by Trump due to such partnerships.
