A “saddened” US President Donald Trump has hit back at Elon Musk’s announcement of a new American political party, labelling it “ridiculous” and warning the tech billionaire is “completely off the rails”.

A day after Musk escalated his feud with Trump and announced the formation of a new US political party, Trump was asked about it before boarding Air Force One in New Jersey, as he returned to Washington after a visit to 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 said.

“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.”

Later on Sunday (local time), Trump went further in a lengthy tirade on his own social media platform.

“I am saddened to watch Elon Musk go completely ‘off the rails’, essentially becoming a train wreck over the past five weeks,” he wrote.

“He even wants to start a Third Political Party, despite the fact that they have never succeeded in the United States – The System seems not designed for them.

“The one thing Third Parties are good for is the creation of Complete and Total DISRUPTION & CHAOS, and we have enough of that with the Radical Left Democrats.”

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

Musk, a top adviser on downsizing and reshaping the federal government during the early days of Trump’s return to the White House, said his party would look to unseat in next year’s midterm elections Republican lawmakers in Congress who had 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 company SpaceX – would probably prefer he stayed out of politics.

“I imagine that those boards of directors did not like this announcement yesterday 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, was regularly seen 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 defence and border security, passed last week on party-line votes in both chambers of Congress. Critics have said it will damage the US 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. He has threatened to pull billions of dollars Tesla and SpaceX receive in government contracts and subsidies in response to Musk’s criticism.

Musk’s announcement of a new party immediately brought a rebuke from investment firm Azoria Partners.

CEO James Fishback said on Saturday it would postpone the listing of its Tesla-linked exchange-traded fund – which had been due for this week – because the America Party posed “a conflict with [Musk’s] full-time responsibilities as CEO”.

Fishback posted several critical comments about the new party to X, reiterating 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,” he 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.”

-with AAP