Last Thursday, amid a flurry of political statements, one stood out: Donald Trump’s threat to cancel federal contracts with companies owned by Elon Musk, the world’s richest man. The main target of that threat is SpaceX, which has received at least $21 billion in U.S. government contracts—with about $13 billion still outstanding.
Read More: NCLEX-PN Exam: Common Errors and How to Avoid Them
Legal Reality vs. Political Theater
Legally, Musk may not have much to worry about. Federal contracts are governed by strict rules, and canceling them on a personal or political whim would likely trigger prolonged legal battles.
Moreover, SpaceX has made itself indispensable to U.S. space and defense operations. As Kimberly Siversen Burke, director of government affairs at consultancy Quilty Space, noted:
“The [U.S. government] is simply too locked in to cut them off over a social media meltdown.”
Still, not all contracts are ironclad. Some development-phase programs or optional service agreements could be more vulnerable. And there are signs the government is beginning to look for off-ramps—or at least diversify its dependencies.
SpaceX’s Unique Position in the Market
In 2024 alone, SpaceX launched 134 rockets, accounting for 83% of all satellites placed into orbit worldwide. The company’s partially reusable Falcon 9 rocket has become the backbone of both commercial and government launches.
National Security Workhorse
In national security, SpaceX has outpaced its main rival, United Launch Alliance (ULA)—a Boeing and Lockheed Martin joint venture—whose Vulcan rocket faced years of delays. Although Vulcan is now operational and Blue Origin’s New Glenn completed a successful first launch, SpaceX remains far ahead in capacity and reliability.
In the latest Space Force contract awards for launches from 2027 to 2032:
- SpaceX: 28 launches
- ULA: 19 launches
- Blue Origin: 7 launches
“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.”
A Critical Supplier Across Government
SpaceX is not just launching satellites—it’s building them. The National Reconnaissance Office is relying on SpaceX’s Starshield platform to construct a multibillion-dollar constellation of spy satellites.
NASA also relies heavily on SpaceX for cargo and astronaut transport to the International Space Station, especially as Boeing’s Starliner program continues to suffer from delays and technical issues.
Where SpaceX Is More Vulnerable
While SpaceX is entrenched in many core missions, it also holds smaller, more flexible contracts that could be at risk. Burke points to one such program: a $140 million Air Force contract to test how commercial satellite networks might integrate with military communications.
Another area of potential vulnerability: a $537 million contract to provide Starlink internet service to the Ukrainian military. Canceling or reducing that deal would harm Ukraine—and Musk—but may be politically palatable to a second Trump administration, especially if U.S. foreign policy shifts.
The Bigger Risk: Shaping the Future
Trump may not need to cancel existing contracts to hurt SpaceX. A more subtle, but possibly more damaging tactic would be redirecting future funding and policy.
For instance:
- The Commerce Department recently opened a $42 billion rural broadband program to companies like Starlink. A new administration could reverse that decision, limiting SpaceX’s commercial growth.
- Trump could also change NASA’s long-term goals, especially its support for Musk’s most ambitious plan: a mission to Mars. “Where Trump can single-handedly harm SpaceX in a significant way is redirecting the mission goals for NASA,” Harrison said.
The Risk of Overreliance
As Musk’s behavior grows more unpredictable, some experts suggest it may be time to diversify away from SpaceX, even without political pressure.
Burke warns that Trump’s threats—and Musk’s provocations—could damage trust in all commercial space ventures:
“Elon’s antics are threatening to rewind the tape,” she said, referring to the years of work spent convincing the Pentagon that private companies could be trusted partners.
Frequently Asked Questions
How much has SpaceX received in government contracts?
SpaceX has secured over $21 billion in U.S. government contracts, with approximately $13 billion still outstanding.
Can a U.S. president cancel those contracts?
Not easily. Most government contracts are legally binding and subject to procurement laws. Canceling them without cause could result in legal challenges and financial penalties. However, future contracts and eligibility can be influenced through policy decisions.
What contracts are most vulnerable to cancellation or political pressure?
While major contracts tied to national security or space exploration are difficult to unwind, smaller, early-stage, or optional contracts—like experimental satellite programs or broadband funding—could be cut more easily.
What’s at stake if the government pulls back from SpaceX?
Besides delays in space missions and military readiness, pulling back could undermine confidence in commercial partnerships broadly. Experts warn that a political backlash against Elon Musk could undo years of progress integrating private companies into national space and defense strategies.
Conclusion
For now, SpaceX’s position in the U.S. space ecosystem appears secure. But its future growth—and its central role in national security—could be constrained by shifting political winds. The company may be too vital to cancel, but not too big to sideline.
