The wording of the card is "When you activate, you may exhaust this card to choose 1 enemy ship of your size class or smaller at distance 1-5. That ship must spend a token or reduce its speed by 1 to a minimum of 1."

Now does that mean that it reduces speed by one?

So I go from 3 to 2 unless I spend a token

or

Does it mean I drop speed from 3 to 1?

I believe it is reduce speed by one and cannot go below one on the speed dial, but want to make sure

Reduce speed BY one, not TO one. So you are correct.

The way it reads also means that if you are already at 1 and you have a nav token, then you must spend the nav token since you cannot change your speed.

The FAQ also adds in the Restriction....

If you Have a Nav Token, you must discard it...

If you do not have a Nav Token, then you reduce your Speed by 1, to a Minimum of 1...

You do not have a Choice .

Which would make the scenario moodswing referenced actually worth it for the player being tractor beamed. Someone is already Speed 1 with a Nav Token, you can hit them with a tractor beam and they must discard the token. If the FAQ didn't clarify, the defending player could declare that they were not going to spend the token and reduce speed, only to not have to reduce speed because they're already at speed one. Now you get to take their token away.

Ok so one more bit of Clarification on this.

The player being hit with Tractor Beam if speed is already at one, cannot drop below one and if they have a token they must discard the token? If the ship is already at speed 1 and has no token than the Tractor Beam has no effect?

The person I play with feels the wording on the card means he can lower my speed to 0. I disagree so I am asking for more clarification

Ok so one more bit of Clarification on this.

The player being hit with Tractor Beam if speed is already at one, cannot drop below one and if they have a token they must discard the token? If the ship is already at speed 1 and has no token than the Tractor Beam has no effect?

The person I play with feels the wording on the card means he can lower my speed to 0. I disagree so I am asking for more clarification

You are correcr. To a MINIMUM OF ONE, also known as not zero,

Ok so one more bit of Clarification on this.

The player being hit with Tractor Beam if speed is already at one, cannot drop below one and if they have a token they must discard the token? If the ship is already at speed 1 and has no token than the Tractor Beam has no effect?

The person I play with feels the wording on the card means he can lower my speed to 0. I disagree so I am asking for more clarification

Sounds like the guy you play with needs a good solid kick in the pants. What kind of mental gymnastics does it take to think "reduce its speed by 1 to a minimum of 1" means you can reduce its speed to zero? :/

Ok so one more bit of Clarification on this.

The player being hit with Tractor Beam if speed is already at one, cannot drop below one and if they have a token they must discard the token? If the ship is already at speed 1 and has no token than the Tractor Beam has no effect?

The person I play with feels the wording on the card means he can lower my speed to 0. I disagree so I am asking for more clarification

"a minimum of 1" means no lower. The guy you are playing is messing with you too much I think.