*

In his feud with Trump, Musk announces "America Party"

*

Musk plans challenges to Republican incumbents

*

Bessent says Musk should focus on running his companies

*

Investment firm delays launch of Tesla ETF

By James Oliphant

WASHINGTON, July 6 (Reuters) - A day after Elon Musk

escalated his feud with Donald Trump and announced the formation

of a new U.S. political party, the Republican president's

Treasury secretary said Musk should stick to running his

companies.

In addition, 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 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.

Speaking on the CNN program "State of the Union" on Sunday,

Treasury chief 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, 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."

The White House did not directly address the threat made by

Musk but said the bill's passage showed that the Republican

Party is in strong shape.

"As the leader of the Republican Party, President Trump has

unified and grown the party in a way we've never seen," White

House spokesperson Harrison Fields 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.

Bessent suggested that Musk holds little sway with voters

who, according to the treasury chief, liked the Department of

Government Efficiency that Musk spearheaded more than they liked

the world's wealthiest person himself.

"The principles of DOGE were very popular," Bessent said. "I

think if you looked at the polling, Elon was not."

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."

Stephen Miran, the chairman of Trump's Council of Economic

Advisers, defended the tax-cut bill on ABC's "This Week"

program.

"The one, big, beautiful bill is going to create growth on

turbo charge," Miran said.

(Additional reporting by Gnaneshwar Rajan and Brendan O'Brien;

Editing by Rami Ayyub and Dale Hudson)