Why Trump and Nasa cannot afford to cut SpaceX contract over Musk feud

Elon Musk and President Donald Trump’s violent feud on Thursday might have a significant impact on many US space initiatives and jeopardise around $22 billion of SpaceX’s federal contracts.

Musk’s criticism of Trump’s tax-cut and spending legislation, which started last week, was the starting point of the dispute, which swiftly got out of hand. When Musk talked in the Oval Office, Trump snapped at him. Then, Musk attacked Trump in a string of X postings, threatening to revoke federal contracts with Musk’s businesses.

Musk took the warning seriously and announced that he would begin “decommissioning” SpaceX’s Dragon spaceship, which is used by Nasa.

Hours later, however, Musk appeared to reverse course. Responding to a follower on X urging him and Trump to “cool off and take a step back for a couple of days,” Musk wrote: “Good advice. Ok, we won’t decommission Dragon.”

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Still, Musk’s mere threat to abruptly pull its Dragon spacecraft out of service marked an unprecedented outburst from one of Nasa’s leading commercial partners.

Under a roughly $5 billion contract, the Dragon capsule has been the agency’s only US vessel capable of carrying astronauts to and from the International Space Station, making Musk’s company a critical element of the US space program.

The feud raised questions about how far Trump, an often unpredictable force who has intervened in past procurement efforts, would go to punish Musk, who until last week headed Trump’s initiative to downsize the federal government.

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If the president prioritized political retaliation and canceled billions of dollars of SpaceX contracts with Nasa and the Pentagon, it could slow US space progress.

Nasa press secretary Bethany Stevens declined to comment on SpaceX, but said: “We will continue to work with our industry partners to ensure the president’s objectives in space are met.”

Musk and Trump’s tussle ruptured an extraordinary relationship between a US president and industry titan that had yielded some key favours for SpaceX: a proposed overhaul of Nasa’s moon program into a Mars program, a planned effort to build a gigantic missile defence shield in space, and the naming of an Air Force leader who favoured SpaceX in a contract award.

Taking Dragon out of service would likely disrupt the ISS program, which involves dozens of countries under a two-decade-old international agreement. But it was unclear how quickly such a decommissioning would occur. Nasa uses Russia’s Soyuz spacecraft as a secondary ride for its astronauts to the ISS.

SpaceX’s rise

SpaceX rose to dominance long before Musk’s foray into Republican politics last year, building formidable market share in the rocket launch and satellite communications industries that could shield it somewhat from Musk’s split with Trump, analysts said.

“It fortunately wouldn’t be catastrophic, since SpaceX has developed itself into a global powerhouse that dominates most of the space industry, but there’s no question that it would result in significant lost revenue and missed contract opportunities,” said Justus Parmar, CEO of SpaceX investor Fortuna Investments.

Under Trump in recent months, the US space industry and Nasa’s workforce of 18,000 have been whipsawed by looming layoffs and proposed budget cuts that would cancel dozens of science programs, while the US space agency remains without a confirmed administrator.

Trump’s nominee for Nasa administrator, Musk ally and billionaire private astronaut Jared Isaacman, appeared to be an early casualty of Musk’s rift with the president when the White House abruptly removed him from consideration over the weekend, denying Musk his pick to lead the space agency.

Trump on Thursday explained dumping Isaacman by saying he was “totally Democrat,” in an apparent reference to reports Isaacman had donated to Democrats. Isaacman has donated to some Republican but mostly Democratic candidates for office, according to public records.

Musk’s quest to send humans to Mars has been a critical element of Trump’s space agenda. The effort has threatened to take resources away from Nasa’s flagship effort to send humans back to the moon.

Trump’s budget plan sought to cancel Artemis moon missions beyond its third mission, effectively ending the over-budget Space Launch System rocket used for those missions.

But the Senate Commerce Committee version of Trump’s bill released late on Thursday would restore funding for missions four and five, providing at least $1 billion annually for SLS through 2029.

Since SpaceX’s rockets are a less expensive alternative to SLS, whether the Trump administration opposes the Senate’s changes in the coming weeks will give an indication of Musk’s remaining political power.

SpaceX, founded in 2002, has won $15 billion of contracts from Nasa for the company’s Falcon 9 rockets and development of SpaceX’s Starship, a multipurpose rocket system tapped to land Nasa astronauts on the moon this decade.

The company has also been awarded billions of dollars to launch a majority of the Pentagon’s national security satellites into space while it builds a massive spy satellite constellation in orbit for a US intelligence agency.

In addition to not being in US interests, former Nasa Deputy Administrator Lori Garver said cancelling SpaceX’s contracts would probably not be legal.

But she also added, “A rogue CEO threatening to decommission spacecraft, putting astronauts’ lives at risk, is untenable.”