In the latest round of public hostilities between Donald Trump and Elon Musk, one remark stood out: Trump’s threat to cancel federal contracts held by Musk’s companies. The prime target is SpaceX, the aerospace firm that has become vital to U.S. national security and space exploration.
SpaceX has secured more than $21 billion in U.S. government contracts, with approximately $13 billion in obligations yet to be fulfilled. While Trump’s threat may have more political flair than legal merit, the friction underscores how deeply entangled the federal government has become with Musk’s sprawling space enterprise — and how difficult, but not impossible, it would be to unwind that relationship.
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SpaceX Is Too Big to Drop — For Now
Despite Trump’s fiery rhetoric, most legal experts and defense analysts believe the federal government would face significant legal and operational challenges if it tried to cancel contracts out of political spite.
“The [U.S. government] is simply too locked in to cut them off over a social media meltdown,” said Kimberly Siversen Burke, director of government affairs at the consultancy Quilty Space.
Indeed, SpaceX is no ordinary contractor. It is the world’s dominant launch provider, accounting for 83% of all satellites placed into orbit in 2024, thanks in large part to its highly reliable and partially reusable Falcon 9 rocket.
Slim Competition in the Launch Market
The company’s grip on national security launches is hard to overstate. United Launch Alliance (ULA) — a joint venture between Boeing and Lockheed Martin — has faced years of delays in rolling out its new Vulcan rocket. Meanwhile, Blue Origin, founded by Jeff Bezos, only recently completed the inaugural flight of its New Glenn rocket.
Space Force’s recent procurement for launches from 2027 to 2032 reflects this imbalance: SpaceX secured 28 launches, more than half of the total, compared to ULA’s 19 and Blue Origin’s seven.
“There’s no replacing SpaceX,” said Todd Harrison, a defense and space analyst at the American Enterprise Institute. “You just do not have the capacity in our other launch options.”
More Than Just Rockets
Beyond launches, SpaceX is becoming deeply integrated into U.S. defense infrastructure. The company is building a classified, multibillion-dollar network of low-Earth orbit spy satellites for the National Reconnaissance Office using its Starshield platform.
In civil spaceflight, NASA relies heavily on SpaceX to transport cargo and astronauts to the International Space Station. Its main alternative, Boeing’s Starliner, has faced persistent delays and technical problems.
Where Trump Could Actually Apply Pressure
While canceling major contracts is unlikely, there are smaller-scale government projects where Trump — or any future administration — could reduce SpaceX’s footprint.
One example: a $140 million Air Force program exploring the integration of commercial satellites into tactical military communications. Because it’s still in early stages, the government could redirect such programs toward other vendors.
Another vulnerable area is the $537 million Starlink contract supporting Ukraine’s military. Curtailing this agreement would not only hurt Musk’s business interests but also deal a blow to Ukraine’s wartime communication capabilities.
Changing the Rules of the Game
Rather than targeting active contracts, a future Trump administration could have a more lasting impact by reshaping policy and steering future business elsewhere.
For instance, the Commerce Department’s $42 billion rural broadband expansion program, revamped in March to potentially allow Starlink participation, could be rolled back — preserving funding for fiber-optic providers instead.
Likewise, Trump could pivot away from the Mars-focused goals of NASA — a mission Musk has long championed — thereby depriving SpaceX of one of its most ambitious long-term objectives.
“Where Trump can single-handedly harm SpaceX in a significant way is redirecting the mission goals for NASA,” said Harrison.
A Risky Overreliance
The current standoff raises broader questions about the federal government’s dependence on a single, often unpredictable, commercial actor. Musk’s erratic behavior has already stirred unease in some corners of Washington.
Burke warns that ongoing tensions could jeopardize years of work to convince national security agencies that commercial space companies are reliable partners. “Elon’s antics are threatening to rewind the tape,” she said.
Frequently Asked Questions
Why does the U.S. government rely so heavily on SpaceX?
SpaceX has become the dominant launch provider globally, responsible for over 80% of satellites launched in recent years. Its Falcon 9 rocket is reliable and cost-effective, making SpaceX indispensable for national security, scientific, and commercial satellite launches, as well as NASA missions to the International Space Station.
How much government funding has SpaceX received?
SpaceX has been awarded more than $21 billion in government contracts, with about $13 billion still outstanding across various programs, including military satellite launches and NASA space missions.
What are the legal challenges if the government tries to cancel SpaceX contracts?
Canceling contracts for political reasons would likely lead to lengthy legal battles. Contract cancellations must be justified by breach or other legal grounds, and doing so out of spite could expose the government to lawsuits and operational disruptions.
Are there any competitors to SpaceX for government contracts?
Yes. United Launch Alliance (ULA), a Boeing-Lockheed joint venture, and Blue Origin, owned by Jeff Bezos, are the main competitors. However, both are still scaling up capacity and face delays, so they cannot yet replace SpaceX’s volume or cost efficiency.
Can the government reduce its dependence on SpaceX?
It can try by awarding smaller, early-stage contracts to other providers, or by redirecting future business to competitors. It could also change policies affecting programs like rural broadband grants or military satellite communication contracts.
How could Trump or any administration undermine SpaceX without canceling contracts?
By redirecting NASA’s mission priorities away from projects aligned with SpaceX’s ambitions, withdrawing support for Starlink contracts (such as those aiding Ukraine), or rolling back programs that allow SpaceX to compete for new government grants.
Conclusion
The U.S. government’s deep reliance on SpaceX reflects the company’s unmatched capabilities in launch services, satellite deployment, and space infrastructure. Its dominance has made it a cornerstone of American space strategy—both civilian and military. However, that reliance also comes with risk, particularly when political tensions flare between powerful figures like Donald Trump and Elon Musk.
While outright contract cancellations would be legally and logistically difficult, there are still levers an administration could pull to limit SpaceX’s role in future government initiatives. Whether through altering NASA’s long-term goals, shifting funding priorities, or rebalancing procurement toward competitors, the path forward may involve a strategic effort to diversify the nation’s space partnerships.