WASHINGTON – President Donald Trump called Elon Musk’s plans to form a new political party “ridiculous,” saying Musk could have fun with his new project but that the United States functions best under a two-party system.

A day after Musk escalated his feud with Trump and announced the formation of a new U.S. political party, the Republican president was asked about it before boarding Air Force One in Morristown, New Jersey, as he returned to Washington upon visiting his nearby golf club.

“I think it’s ridiculous to start a third party. We have a tremendous success with the Republican Party. The Democrats have lost their way, but it’s always been a two-party system, and I think starting a third party just adds to confusion,” Trump told reporters. “It really seems to have been developed for two parties. Third parties have never worked, so he can have fun with it, but I think it’s ridiculous.”

Musk announced on Saturday that he is establishing the “America Party” in response to Trump’s tax-cut and spending bill, which Musk said would bankrupt the country.

In response, investment firm Azoria Partners, which had planned to launch a fund tied to Musk’s electric automaker Tesla, said it was delaying the venture because the party’s creation posed “a conflict with his full-time responsibilities as CEO.”

Musk, who served as a top adviser to Trump on downsizing and reshaping the federal government during the first few months of his presidency, said his new party would in next year’s midterm elections look to unseat Republican lawmakers in Congress who backed the sweeping measure known as the “big, beautiful bill.”

Speaking on the CNN program “State of the Union” on Sunday, Treasury Secretary Scott Bessent said the boards of directors at Musk’s companies – Tesla and rocket firm SpaceX – probably would prefer him to stay out of politics.

“I imagine that those boards of directors did not like this announcement yesterday (Saturday) and will be encouraging him to focus on his business activities, not his political activities,” Bessent said.

Musk spent millions of dollars underwriting Trump’s 2024 re-election effort and, for a time, regularly showed up at the president’s side in the White House Oval Office and elsewhere. Their disagreement over the spending bill led to a falling out that Musk briefly tried unsuccessfully to repair.

The bill, which cuts taxes and ramps up spending on defense and border security, passed last week on party-line votes in both chambers of Congress. Critics have said it will damage the U.S. economy by significantly adding to the federal budget deficit.

Trump has said Musk is unhappy because the measure, which Trump signed into law on Friday, takes away green-energy credits for Tesla’s electric vehicles. The president has threatened to pull billions of dollars Tesla and SpaceX receive in government contracts and subsidies in response to Musk’s criticism.

Investor Rebuke

Musk’s announcement of a new party immediately brought a rebuke from Azoria Partners, which said on Saturday it will postpone the listing of its Azoria Tesla Convexity exchange-traded fund. Azoria was set to launch the Tesla ETF this week.

Azoria CEO James Fishback posted on X several critical comments about the new party and reiterated his support for Trump.

“I encourage the Board to meet immediately and ask Elon to clarify his political ambitions and evaluate whether they are compatible with his full-time obligations to Tesla as CEO,” Fishback said.

On Sunday, Fishback added on X, “Elon left us with no other choice.”

The Democratic Party appeared to welcome the rift between Trump and Musk.

“Trump’s MAGA party is splitting at the seams in the wake of his nightmare budget bill,” said Abhi Rahman, a spokesperson for the Democratic National Committee. “Republicans are waking up and facing the reality that they just signed their own pink slips, and are desperate for someone else to blame.”

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(Reporting by James Oliphant in Washington and Daniel Trotta in Carlsbad, California; Additional reporting by Andrea Shalal, Gnaneshwar Rajan and Brendan O’Brien; Editing by Rami Ayyub, Dale Hudson and Diane Craft)