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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 president's Treasury secretary said Musk should stick to running his companies.

And investment firm Azoria Partners, which had planned to launch a fund tied to Musk's automaker Tesla (TSLA.O), opens new tab, said it was delaying the venture because the party's creation posed "a conflict with his full-time responsibilities as CEO".

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

Speaking on CNN on Sunday, Treasury chief Scott Bessent said the boards of directors at Musk’s companies – Tesla and rocket firm SpaceX – likely would prefer him to stay 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, who served as a top adviser to the White House on trimming the size of government during the first few months of Trump’s presidency, said his new party would in next year’s midterm elections look to unseat Republicans in Congress who backed the “big, beautiful bill”.

Musk spent millions of dollars underwriting Trump’s re-election effort and for a time, regularly showed up at the president’s side in the 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. Critics argue it will damage the economy by significantly adding to the federal budget deficit.

Trump has said Musk is unhappy because the bill, 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.