The video explores the dynamic relationship between President Trump and Elon Musk, focusing on the recent developments in trade tariffs and the impact they have on Musk's businesses. Throughout Trump's second term, tariffs have been a defining aspect, alongside Musk's advisory role to Trump and his ventures, particularly involving Doge. Tensions arise as Musk criticizes the tariffs, especially after remarks from Peter Navarro, leading to a strain in Musk’s unwavering support for Trump.

Elon Musk's holdings face significant challenges due to the tariffs. Tesla is particularly affected due to the sourcing of rare earth minerals from China, crucial for its electric vehicles. The imposition of tariffs threatens Tesla's margins, particularly in the Chinese market, which is pivotal for Tesla. Similarly, SpaceX faces risks due to rising supply chain costs and geopolitical sentiments impacting its expansion, most notably through its Starlink project, which aims to grow through international contracts.

Main takeaways from the video:

Please remember to turn on the CC button to view the subtitles.

Key Vocabularies and Common Phrases:

1. ardent [ˈɑːrdnt] - (adjective) - Showing strong enthusiasm or devotion. - Synonyms: (enthusiastic, passionate, zealous)

Elon Musk, he is a senior Trump adviser. He has endorsed President Trump since July and has really been an ardent supporter.

2. liberation day [ˌlɪbəˈreɪʃən deɪ] - (noun) - A specific day marked for significant changes or events, often involving freedom or considerable shifts. - Synonyms: (emancipation day, freedom day, independence day)

Yes, the tariffs have been almost a breaking point between Musk and Trump until liberation day just two weeks ago.

3. sentiment [ˈsɛntɪmənt] - (noun) - A thought, view, or attitude, especially one based on emotion. - Synonyms: (feeling, opinion, attitude)

If they cannot continue to import these magnets from Chinese refiners at reasonable prices, then that will absolutely crimp Tesla's margins, which could provide further downward pressure on the stock and expose the company to more negative investor sentiment

4. protectionist [prəˈtɛkʃənɪst] - (adjective) - Advocating the economic policy of restraining trade between states through methods such as tariffs on imported goods. - Synonyms: (nationalist, isolationist, trade-restrictive)

Peter Navarro, who's this sort of dyed in the wool protectionist trade hawk, somebody who has long pushed for restrictive trade measures.

5. levy [ˈlɛvi] - (noun) - An imposed tax, fine, or other fee. - Synonyms: (tax, duty, tariff)

Trump is pushing forward with these 10% levies on all countries.

6. oligarchy [ˈɒlɪˌɡɑːrki] - (noun) - A small group of people having control of a country or organization. - Synonyms: (ruling class, elite, aristocracy)

Whereas with Elon Musk, you have another wing of the sort of Trump backers, which is sort of the tech oligarchy, the billionaire wing.

7. geopolitical [ˌdʒiːoʊpəˈlɪtɪkəl] - (adjective) - Relating to politics, especially international relations, influenced by geographical factors. - Synonyms: (global, international, strategic)

geopolitical sentiments impacting its expansion, most notably through its Starlink project, which aims to grow through international contracts.

8. tit for tat [tɪt fɔːr t�t] - (phrase) - The infliction of an injury or insult in return for one that one has suffered. - Synonyms: (retaliation, reprisal, counterattack)

We've already seen the province of Ontario, Canada, cancel about $70 million contract it had with Starlink because of the escalating tit for tat tariffs.

9. symbiotic [ˌsɪmbaɪˈɒtɪk] - (adjective) - Involving interaction between two different organisms living in close physical association. - Synonyms: (mutualistic, cooperative, interdependent)

And what the merger has solidified, really between X and Xai is that, you know, Xai and X are naturally sort of symbiotic.

10. exuberance [ɪɡˈzuːbərəns] - (noun) - The quality of being full of energy, excitement, and cheerfulness. - Synonyms: (enthusiasm, excitement, elation)

There was an exuberance that was probably irrational.

Why Trump’s Tariffs Are Disastrous For Elon Musk

Hi, everybody. I'm Brittany Lewis, a breaking news reporter here at Forbes. Joining me now is my Forbes colleague, staff writer Jon Hyatt. John, thanks so much for joining me. Good to be here, Brittany.

Looking at the past three months of Trump Round Two, there are really two pillars that are defining President Trump's second term. Tariffs and Elon Musk. And as we saw, with tariffs, President Trump has threatened, started, paused, and escalated trade wars with allies and adversaries alike. And as we see, Elon Musk, he is a senior Trump adviser. He has endorsed President Trump since July and has really been an ardent supporter. He's also the face of Doge. So I'm, I'm curious at the intersection of these two pillars here, Elon Musk and tariffs. What has Elon Musk said about tariffs so far? What has been his reaction?

Yes, the tariffs have been almost a breaking point between Musk and Trump until liberation day just two weeks ago. Now these two men have really been in lockstep. Musk has been supporting Trump and his administration's slew of executive orders and initiatives at every step, while Trump has been supporting Elon Musk's controversial Doge efforts. But with the liberation day tariffs and the ensuing market chaos, we have seen a sort of break between Trump and Musk, which has been sort of playing out on X Musk's social media platform, as well as between an ongoing spat between Musk and one of Trump's critical trade advisors, Peter Navarro. And so it's been really interesting to play out, and there's a lot at stake for Musk.

The tariff back and forth was really the first time we saw Elon Musk not publicly in lockstep with President Trump. And this really came to a head after President Trump's top White House trade adviser, Peter Navarro, made some comments about Elon Musk. He said this, Elon's not a car manufacturer. He's a car assembler. In many cases, Elon Musk really took offense to that. He called Peter Navarro a moron. And things that are worse, I'm not going to say here. Peter Navarro essentially denied that there was a feud. He said he's been called worse before. The White House spokesperson, Caroline Levitt said, boys will be boys. I mean, what do you make of this feud?

They could say it's not a feud, but we all have eyes and we all know what a feud is. What I think is really quite interesting about this is that you kind of have two different elements of the Trump base here. The Trump constituency warring, and on the One hand you have Peter Navarro, who's this sort of dyed in the wool protectionist trade hawk, somebody who has long pushed for restrictive trade measures and has been controversial in his positions on the economics of trading. A lot of mainstream economists would say that Peter Navarro is a fringe figure and that the theories he espouses on the benefits of the sort of protectionist world that he advocates for are not true. Whereas with Elon Musk, you have another wing of the sort of Trump backers, which is sort of the tech oligarchy, the billionaire wing. You have somebody in Musk who has made his fortune really on the back of free trade and on the back of the sort of neoliberal world order that has created so much prosperity for businessmen like him and for consumers at large.

And so what you're seeing with these two is really sort of a clash of ideologies as much as the sort of petty back and forth that we're seeing. And they're really trying to lay claim to what is the true meaning of Trumpism. What really is this administration all about. And I think we'd have to say that as of right now, Peter Navarro is winning that fight. I mean, Trump is pushing forward with these 10% levies on all countries. He is ramping up the trade war with China, which is a crucial producer of materials and component of Elon Musk's business empire. So, you know, as of right now, you have to say that Musk is on the outside looking in when it comes to the Trump administration's trade policies. And that's not a place he's been in the past few months, really on the outside looking in.

As we know, we work at Forbes, money does talk. And perhaps that's the reason why Elon Musk doesn't like these tariffs. Ever since liberation day, when President Trump unveiled the sweeping trade policy and the tariffs, stocks tumbled. Global markets lost trillions. We saw at one point, Donald Trump himself lost 500 million in his net worth. How has the tariff policy impacted Elon Musk's fortune?

Well, it's hurt Tesla's stock price. We saw Tesla's stock price go down in the days after the liberation day announcements by, I think it was upwards of 20%. And it wasn't alone. I mean, any large multinational company with exposure to the global economy, which is all of them, they all saw their stocks hit after liberation day. And what was interesting is that in those immediate few days, Musk wasn't saying anything. He continued on X as normal, tweeting out criticisms of Chuck Schumer retweeting fanboys of his talking about Starlink, that's SpaceX's satellite Internet, Internet, satellite business. But a couple days later, he started to make his voice heard. He was tweeting out a video of economist Milton Friedman extolling the benefits of free trade. He commenced his spat with Peter Navarro. He started to articulate his own sort of vision for what the Trump administration's trade policies should be.

And he wasn't alone, of course. Other business figures, bankers like Jamie Dimon, were also voicing their concern about the direction in which Trump was taking the global economy and of course the U.S. economy. And so what we saw last week was, you know, Trump instituted this sort of 90 day pause on tariffs against all the other countries excluding China, except for those 10% levies. And we did see a recovery in the stock price of Tesla as well as other stocks.

In my conversations with a lot of economists, a lot of strategists, they all say tariffs are a tax on the American consumer. I'm curious how tariffs are impacting Elon Musk's company specifically. So I do want to start with Tesla. In my conversation with Alan Ounsman, who is one of our Forbes colleagues, he's reported, things are bad at Tesla, they're about to get worse. And that's for a host of different reasons. Lackluster Cybertruck sales in Q1, other viable competitors. Elon Musk also has a branding problem. Another layer are the auto tariffs. And we know that Tesla isn't going to be hit as hard as other automakers because the cars are more American made. But how specifically are the tariffs impacting Tesla?

Well, one really interesting element of this is that Tesla is of course, America's largest producer of EVs, electric vehicles, and EVs require certain types of rare earth minerals and magnets to power their engines, their electric engines. And those rare earth materials are almost exclusively mined and refined in China. And this presents a major obstacle for Tesla's business. If they cannot continue to import these magnets from Chinese refiners at reasonable prices, then that will absolutely crimp Tesla's margins, which could provide further downward pressure on the stock and expose the company to more negative investor sentiment.

And what's really critical for Tesla is that it be able to continue to gain access to these critical rare earth materials. The long term goal, which Elon Musk has advocated for on X in the last couple of hours actually, is that the US Needs to step up its refining capabilities of these rare earth minerals and production of these Magnets so that domestic production can commence. But that's obviously not something you can do overnight. And so it presents an immediate near term risk to Tesla's business.

Beyond the increased cost of rare earth minerals, magnets and even the accessibility to those metals is China's Tesla, or, I'm sorry, Tesla's China business people might not realize that China, China is actually the largest market that Tesla has. Tesla has a massive gigafactory in Shanghai which produces Teslas that it sells to Chinese consumers. And in recent years, Tesla has taken a hit from domestic competitors in China, EV makers like byd, which is now the world's largest EV maker. And yet China is still Tesla's biggest. I'm sorry, China is still Tesla's biggest business. And so just the negative sentiment among Chinese consumers toward Elon Musk and towards this branding problem that you alluded to because he's so closely intertwined with the Trump administration and global sentiment around the Trump administration, you have to think that that is also going to hurt Tesla's business there.

Now, I want to move on because we know, as you're saying that Tesla already had some problems. The tariffs aren't really doing anything to help that another company that Elon Musk really is the face of could have another branding problem is Space X. So how are the tariffs impacting that company and what is that doing to Elon Musk's stake?

Yeah, so SpaceX is a little different from Tesla in a critical regard in that it's privately held. So there's certain information about SpaceX that we don't have as outside observers. But similar to Tesla, I mean, this is a manufacturer of complex machinery, and manufacturers of complex machinery rely on imports of different types of commodities and metals and parts from around the world. And so Trump's tariffs are inevitably going to affect the supply chain costs of a major global company like SpaceX. And specifically, you know, just as Tesla requires certain rare earth magnets for its EV engines, so do SpaceX rocket engines require rare earth magnets? One in particular that folks have told me about, samarium, which is on the list of rare earth minerals that China is now requiring licenses for to continue exporting, this is a critical element for creating propulsion systems or engines for SpaceX rockets.

So it may not pose an immediate near term threat to SpaceX's business, to its launch rocket business. But I mean, in order for it to continue to manufacture rockets, I mean, it needs access to these sorts of minerals. And then more broadly speaking, a critical part of SpaceX's business is its satellite Internet provider, Starlink. And so Starlink accounts for about 2/3 of SpaceX's revenue. This is a company that has launched thousands of satellites into the sky that provide broadband Internet access. And it's become a major player in the satellite Internet business, probably the major player globally.

But similar to Tesla, Starlink and SpaceX are so closely associated with the brand and image of their controlling shareholder, Elon Musk, that it faces reputational risks. We've already seen the province of Ontario, Canada, cancel about $70 million contract it had with Starlink because of the escalating tit for tat tariffs between the US And Canada. We saw Italian officials table talks of a $1.5 billion deal for Starlink to oversee defense communication systems because of increasing backlash to Musk and the Trump administration. And so, you know, for Starlink to continue to grow its business, you know, it's seeking those contracts with international entities.

And In a Trump 2.0 world where the US is so combative and where alliances are fracturing and in which Musk is so closely associated with the fracturing of that order, it does pose a risk for Starlink, because how will it sign up new international clients if those clients view the U.S. view Trump and view Musk unfavorably? John, as we sit here right now, President Trump has largely paused the the reciprocal tariffs, but there's still a baseline tariff. There is still that ratcheted up tariff on China, that tit for tat and tariffs are the highest we've ever seen since pre Great Depression levels.

Have we seen Elon Musk's net worth bounce back at all from this pause? What does that look like right now? Right now he's at about $370 billion. So he's still comfortably the world's richest person. Tesla's stock price has been interesting because if you look at it year to date, it is down about 30%. So it has taken a major hit over the last three months. However, if you compare it to a year ago, Tesla stock price is still up. If you compare it to just after liberation day, it's up from then, too. And so we have to kind of bear in mind that Tesla, Tesla's valuation was already extraordinary and some would argue inflated before president, before Trump won reelection. And following Trump's election, Tesla stock soared 90%. There was an exuberance that was probably irrational. And so even though we've seen a climb down in Tesla stock, which is one of the key sources of Elon Musk's fortune, it's still extraordinarily high for an automaker of its size.

In the case of SpaceX, you know, SpaceX is privately held, but we do see on secondary markets that the share price has dipped a little bit over recent weeks, but it still is holding fairly steady around the $350 billion valuation mark. So, you know, SpaceX is still a solid source of Elon Musk's fortune, and it's actually now the largest source of his fortune. But one thing that has offset the decline in Tesla share price since January is the comeback in X. Formerly Twitter. And so following Trump's election in November, we've seen quite the extraordinary comeback for X. And I really want to talk about that because Elon Musk, despite what we're seeing at Tesla and SpaceX, he's still comfortably the richest person in the world, according to Forbes.

And there is a glimmer of good news to, to his bottom line. You're reporting on this merger between Xai, Elon Musk's AI startup company, and X. So talk to us about the deal. Yeah, so this is a really unprecedented deal in some ways, and it really got lost in the news of tariffs and the general craziness of the Trump administration. But at the beginning of April, Musk announced on X, naturally, that he had completed a merger between X, so the social media company we all know as Twitter, and, and Xai the startup, the AI startup, the OpenAI competitor that he just launched a few years earlier.

And so in this merger, it was $113 billion merger net of debt. And so that deal values Xai, the AI startup, at $80 billion, which is $30 billion higher than the valuation at which it last raised outside funding. So that's an extraordinary $30 billion increase from just a couple months ago when it last raised in November, and then X. And so with X, the new valuation is 45 billion. That's inclusive of debt. So $12 billion in debt takes it down to 33 billion. But that's just a hair more than the valuation at which Elon Musk took it private in 2022.

And the reason I say this is such a great comeback for X is because just as recently as end of last year, investors in X companies like Fidelity were marking their equity valuation at around the $10 billion mark. So an extraordinary 70% plus haircut that they had assigned the value of X. This was with good reason. It's because, you know, following Elon Musk's takeover, you know, he completely remade the site in his own image. So he, you know, started telling Advertisers to go F themselves.

As we all remember, he fired 75% of the staff. He took away a lot of the guardrails and content moderation features that have been built up over years. And so we saw that big exodus of blue chip big advertisers, and that really hit X's revenue. Financials reported in the Wall Street Journal and elsewhere show that last year X's revenue was about 2.5, 2.7 billion, down from over 5 billion in 2021. The last year before Musk's takeover, however, adjusted earnings before interest, taxes and other expenses, EBITDA had bumped up a lot. So previously in 2021, EBITDA had been about 680 million under Musk's control. Last year, EBITDA was 1.25 billion.

And so this is typical Musk. He comes in, he slashes expenses, he lays off a ton of people, he breaks things and then he fixes them to see, you know, what's actually necessary. And so, you know, an investor in X I spoke to was said, obviously this is worth 44 billion, the valuation at which you took it private. I mean, this is a company doing 1.25 billion in EBITDA, which no doubt is an improvement, but we have to remember that it has that huge $12 billion debt load still from the take private.

And what the merger has solidified, really between X and Xai is that, you know, Xai and X are naturally sort of symbiotic because, you know, X is a place where people go, it commands our attention. It's a social media feed where we all spend our time or at least journalists and those who, you know, miss Twitter. But Grok, the, the, the chatbot, you know, that's powered by Xai. And so, you know, Grok is available on X. So it kind of makes sense that they come under the same roof and they, they find those synergies.

Critics, though, would say that, you know, Elon Musk is the controlling shareholder of both of these multibillion dollar companies, and he's just pushing this deal through to inflate the valuations of both companies. And he doesn't have any guardrails preventing him from doing so. You know, there are not independent boards of directors at these companies who are going to, you know, evaluate whether or not this deal is really at evaluations that are appropriate and, or, you know, whether minority shareholders want the deal to go through.

That being said, the minority shareholders definitely do want the deal to go through. These are firms like Andreessen, Horowitz, Sequoia Capital, abc. These are all Musk stands. And anything that Musk says they're, they're good with. And he's made them all a lot of money in the past, so there's no reason to think he won't this time either.

What you said about Elon Musk and what he did to Twitter, now X is really the blueprint of what he's doing with Doge. Cutting people, cutting everything, maybe over cutting, and then seeing what's left and then growing it from there. And the last thing you really want to hear as an investor is someone who just bought a company telling advertisers to go F themselves.

So investors, as you're saying, are very happy for this X comeback. Some are too critical that this is too much of a sweetheart deal for Elon Musk. But just how much of a sweetheart deal is it? How much did this boost his bottom line? The value of Musk's stake in X and XAI was boosted by our measurements by around $33 billion.

And bear in mind we had last estimated his stakes in those companies in late February, early March, when we were finalizing our World Billionaires list. And so, you know, this was an extraordinary on paper gain for Musk of $33 billion.

Elon Musk has been vocal about really wanting to be a pioneer in the AI space. Our colleague Alan Ohnsman said this about Elon. He said he claims the carmaker will someday be the most valuable AI company in the world, meaning Tesla. But Tesla is not the AI powerhouse that Elon Musk says it is. Is Elon Musk hoping X AI is going to be his AI crown jewel?

I think that's fair to say. I mean, this, this company has received over $12 billion from outside investors. It's building one of the world's largest cluster of supercomputers outside of Memphis, Tennessee. And so he's putting a lot of chips in this basket. And let's not forget that Musk's original AI crown jewel was OpenAI, the firm that we all know. He co founded that with Sam Altman. And ultimately there was a rift between those two men over the direction of the company.

And so XAI is in some ways Elon Musk's rebuttal to OpenAI. And, you know, with the gravitas of Musk and with the backing of his institutional investors like Andreessen Horowitz, he is turning it into a Goliath in its own right. We're seeing a lot from Elon Musk. Right now with this merger, with his rebuttal to President Trump's tariffs with Tesla tumbling, I mean, what specifically, when you're looking at Elon Musk as a whole, what are you specifically looking out for next?

I'm really curious to see the extent to which he recedes from the political spotlight when his 130 day stint as a special government employee ends. Is he actually going to leave Washington? Is he actually going to step back from his sort of de facto role right now as Trump's right hand man? Is he still going to be trying to influence the policy not just of Doge, but of the administration as a whole?

And more equally important, will Trump still view him as favorably as he has? There have been reports that Trump is kind of tiring of Musk, that he's ready for his Doge tenure to end and that he wants to get on with governing as without this sort of heavy weight of Musk always around him. So it'll be really interesting to see the extent to which these two men continue to influence each other. And it will be interesting as that 130 days comes to an end if he does leave on his own, if this reported rift comes into the actual spotlight opposed to just reported rift, and then there's a ton to look out for.

John Hyatt, I appreciate our conversations, I appreciate your reporting and I'm looking forward to the next one. Thanks Brittany. Great to see you as always.

TECHNOLOGY, ECONOMICS, POLITICS, ELON MUSK, TRADE TARIFFS, SPACEX, FORBES