WASHINGTON — The Trump administration has struck a landmark deal with Elon Musk’s artificial intelligence company xAI, just days after the president and the billionaire entrepreneur were seen exchanging handshakes at the memorial service for conservative activist Charlie Kirk. The agreement is the clearest sign yet of a thaw in relations between Trump and one of his most high-profile and unpredictable allies.

The Deal

Announced Thursday, the deal allows federal agencies to use xAI’s Grok chatbot across government departments for a nominal fee of just $0.42 per agency for the next 18 months. The contract, secured through the General Services Administration (GSA), positions xAI alongside rival providers such as Google’s Gemini and Meta’s LLaMA, both of which have also signed agreements with Washington.

The deal follows Musk’s earlier success in July, when xAI was included among four AI companies awarded up to $200 million in contracts with the Department of Defense. Yet until this week, xAI had been conspicuously absent from the

USAi.gov platform launched in August, which allowed federal employees to test a range of AI tools. That platform instead featured some of Musk’s fiercest competitors, including OpenAI—the company he helped found but has since become one of its sharpest critics.

A Political Reconciliation

The timing of the new agreement has raised eyebrows. It comes on the heels of a very public reconciliation between Trump and Musk at the Arizona memorial for Charlie Kirk. Once at odds—with Musk questioning Trump’s entanglement in the Jeffrey Epstein scandal and floating his own political ambitions—the two men appeared relaxed as they shared a brief but cordial conversation.

“I thought it was nice, he came over, we had a little conversation,” Trump told reporters after the memorial. “We had a very good relationship, but it was nice that he came over.”

Musk, for his part, has toned down his political rhetoric in recent months, focusing more on his businesses and posting less about partisan issues. In June, he conceded he had “gone too far” in some of his criticisms of the president. A recent regulatory filing from Tesla underscored the shift, noting that Musk had given assurances to his board that his political involvement would be scaled back “in a timely manner.”

Business Meets Politics

The partnership reflects both Trump’s pragmatic embrace of emerging technologies and Musk’s renewed willingness to align himself with Washington after a period of tension. For Trump, who has made innovation and “American strength in technology” part of his second-term narrative, the xAI deal reinforces his message of government modernization.

For Musk, the deal represents both validation and opportunity. “xAI has the most powerful AI compute and most capable AI models in the world,” Musk declared in a statement. “Thanks to President Trump and his administration, xAI’s frontier AI is now unlocked for every federal agency, empowering the US government to innovate faster and accomplish its mission more effectively than ever before.”

The Road Ahead

Still, the partnership is not without risks. Critics question whether Musk’s deep political ties could create conflicts of interest, especially given his leadership of Tesla and SpaceX, both of which rely heavily on government contracts. Others note that Musk’s AI ventures remain unproven at scale compared to rivals like Google and Microsoft.

Yet, for now, the deal cements a powerful new chapter in the Trump-Musk relationship—one that blends political reconciliation with technological ambition. What began as a handshake at a memorial may prove to be the foundation of a defining alliance in America’s race to dominate the AI frontier.