On July 1, 2025, after the Senate formed a 50:50 deadlock with the “Bigger is Better Act,” Vice President Mike Pence secured victory for the bill, marking a significant legislative triumph for Trump.
As one of Trump’s key campaign contributors, Elon Musk became the biggest loser in the “Bigger is Better Act.” The “Trump-Musk alliance” crumbled completely, and Musk fiercely criticized the bill for several days in a row, even threatening to derail the support for the bill among lawmakers and even form an “American Party” to overturn the existing political landscape and power dynamics in the United States.
This dramatic shift from allies to adversaries was not an impulsive act but a culmination of long-standing political and economic cracks that eventually erupted.
On May 30, at the Oval Office in the White House, Musk attended a press conference held by Trump.
From an economic perspective, Musk’s political investments did not yield the expected returns but instead faced substantial losses.
The “Bigger is Better Act” extended the $7,500 tax credit for electric vehicle purchases set to expire at the end of 2025 to September 30, 2025, while retaining fossil fuel subsidies. Tesla would lose $1.7 billion in profits annually, and its federal subsidy program for expanding the nation’s charging network would be cut in half. Moreover, the large deficit expansion in the “Bigger is Better Act” erased the efforts of DOGE (Department of Government Efficiency), which had been made earlier.
Politically, Trump aligned himself with the establishment, pushing Musk out of the “power circle.”
During the government efficiency department reform process, Trump explicitly stated that personnel decisions belonged to cabinet members, effectively supporting the establishment and safeguarding the interests of traditional energy and military industries. Trump also tacitly supported the establishment’s attempts to marginalize Musk. For example, he refused to establish an office near the White House for Musk, and his nominations for key positions such as the Secretary of the Treasury and the Director of NASA were repeatedly rejected by Trump.
During the “Big Beautiful Act” discussion, Trump issued warnings to lawmakers who leaned towards Musk’s stance. Concurrently, he implemented measures such as terminating or reducing contracts, canceling tax incentives, and strengthening government oversight and contract reviews, resulting in Musk’s net worth decreasing by approximately $34 billion. Even during a White House meeting, he publicly expressed consideration of expelling Musk to prevent him from exploiting his wealth and political influence to undermine Trump’s political agenda.
Trump, Musk
Trump’s victory has exacerbated the division within the United States.
The “Big Beautiful Act” will further widen the wealth gap in the country, reinforce populism, and may cause some lower-middle-class white Americans to feel deceived, laying the groundwork for a backlash against leftist politics in the coming decade.
The massive tax cuts mean that the U.S. economy can regain growth momentum in the short term. While wealthy individuals and their businesses save on taxes, asset prices reach new highs, but the source of funding for these tax cuts is the comprehensive increase in tariffs, significant reductions in welfare benefits for the bottom rungs, and ongoing fiscal deficit expansion. This naked redistribution policy, which targets the rich at the expense of the poor, will also harm the middle and lower classes within the MAGA movement.
The “Big Beautiful Act” also reveals internal contradictions and fissures within the Republican Party. On one hand, it has provoked discontent among traditional conservative Republicans who favor a smaller government. Three Republican conservative senators voted against the bill, and at least six Republican congressmen opposed it.
On the other hand, right-wing populists like Steve Bannon and Peter Navarro view techno-right wing figures like Musk as a threat to the right-wing populist movement, firmly supporting Trump’s efforts to combat Musk. The “Big Beautiful Act” will further escalate the divide between right-wing populism and techno-right wing.
Trump’s conflict with Musk has also led to the internal division within the tech right-wing, with future developments potentially splitting into three directions: Firstly, the defense technology sector represented by risk funds, defense technology companies, and national security agencies. This sector heavily relies on government orders and defense contracts, sharing traditional conservative political ideologies with the right-wing populist camp. Consequently, it will further strengthen its alliance with the right-wing populism.
Secondly, the Silicon Valley establishment represented by the cryptocurrency industry and artificial intelligence. The cryptocurrency sector is set to become a significant financial backer for the Republican Party. Technocrats like Emil Michael and David Sacks have established deep connections with the Silicon Valley establishment and the White House and federal agencies, gaining policy-making power in the tech industry, especially in areas such as cryptocurrency and AI. Moreover, the Trump family’s involvement in cryptocurrencies provides direct access to the White House for the Silicon Valley establishment.
Thirdly, the Musk faction represented by his companies and industries. As this faction transitions towards becoming an independent political force, “The American Party,” its political influence could undergo a significant qualitative change. However, Musk’s key business areas in the US—including cryptocurrency, defense, and electric vehicles—will face commercial interests being impacted.
On March 11th, Trump and Musk were seen chatting with the media next to a Tesla car at the White House.
For example, Musk’s plan to issue stablecoins in the US might be hindered. With the cessation of subsidies for electric vehicles, Tesla may shift its focus from production in the US to Europe and Shanghai factories, weakening America’s competitive position in the electric vehicle sector. This also presents China with strategic opportunities to further strengthen and consolidate its leadership position in the global clean energy system in the future.
“The Spider Catches the Cicada, but the Hungry Crow is Behind”
Undoubtedly, Vanessa has become the “biggest winner” in the split between the “Greater Good Act” and the “Tech Mafia.” With her “key vote,” along with her unique political positioning and balancing skills, Vanessa’s status within the Republican Party is increasingly rising.
On June 27th, Vice President Vanessa was at the Oval Office of the White House.
Firstly, she acted as a mediator in the conflict between Trump and Musk. Vanessa adopted a delicate balance strategy in the conflict between Trump and Musk, supporting Trump while maintaining political loyalty and soothing and coordinating Musk’s support to prevent a complete split between the Republican Party’s tech capital and right-wing populism.
Secondly, Vanessa confirmed her key role within the Republican Party. As the financial chairperson of the Republican National Committee, Vanessa became the first vice president to hold this position in history, controlling the party’s power center. She directly controlled the allocation of campaign funds and the nomination mechanism for candidates, which could directly influence the seat competition in the midterm elections in 2026.
Moreover, Vanessa was able to push the Republican agenda and maintain unity within the party. In Senate votes, Vanessa successfully persuaded Republican senators like Murkowski, Holi, and Scott to vote in favor. At the same time, Vanessa cast the decisive vote for the “Greater Good Act,” demonstrating her ability to push key priorities and making her a key figure in maintaining Republican unity.
Furthermore, Vanessa can replace Musk as a bridge between the Trump administration and the tech right wing. She focused on strengthening fundraising activities aimed at the tech right wing, thus becoming the main contact between the Trump administration and the tech right wing, filling the vacuum left by Musk’s withdrawal from the Trump circle of power.
On October 5th, 2024, in Bartlett, Pennsylvania, Musk, Trump, and Vanessa attended a campaign event.
Authors: Zhai Dongsheng, Dean of the Regional and National Studies Institute at Renmin University of China; Tao Huan, Assistant Researcher at the Institute.