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Trump threatens to cut subsidies for GM due to plant closures
NEW YORK, Nov 28, 2018 (BSS/AFP) – President Donald Trump threatened to
cut subsidies to General Motors on Tuesday, a day after the US automaker’s
bruising layoff announcement that hits politically crucial states in the US
Midwest.
It was the latest angry outburst from Trump who has frequently attacked US
companies that fail to fall in line behind his promises to protect American
jobs.
“The U.S. saved General Motors, and this is the THANKS we get!” Trump said
on Twitter, alluding to the government bailout during the financial crisis.
“We are now looking at cutting all @GM subsidies, including for electric
cars.”
Trump’s statement — which sent GM shares lower — came after the
automaker on Monday announced it was cutting 15 percent of its workforce,
shuttering five plants in the United States, including two in Michigan and
one in Ohio, key battleground states that Trump narrowly carried in the 2016
presidential election.
GM defended the move as necessary to position the company for a changing
market, as it faces weak sales for smaller cars and shifts resources towards
investments in electric and autonomous vehicles.
The company responded to Trump saying it remains “committed to maintaining
a strong manufacturing presence in the U.S., as evidenced by our more than
$22 billion investments in U.S. operations since 2009.”
And it said “many” of the workers impacted by the plant closures “will
have the opportunity to shift to other GM plants,” where it produces popular
and top-selling trucks and SUVs.
The US currently provides subsidies to car buyers of $2,500 to $7,500 for
electric vehicles by all automakers depending on the model, and how many have
been sold. GM produces the all-electric Chevrolet Bolt, and already was
expecting to see the subsidies drop early next year.
Unions blasted GM for the announcement, while Democrats lambasted Trump
for supporting a large corporate tax cut that was sold as a job-creating
program, but in fact boosted company profits.
Some observers also took aim at Trump’s trade policies, which raised costs
sharply for automakers due to the tariffs he imposed on imported steel and
aluminum.
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Although GM said Monday the plant closures were not related to the
tariffs, the New York Daily News blamed the duties, and published a cartoon
on the front page showing a GM vehicle carrying Trump “off a cliff.”
Companies subject to Trump’s attacks typically have been reluctant to
respond directly, but industry groups like the Business Roundtable have
frequently criticized the administration’s trade policies for damaging US
competitiveness and raising costs.
– Raising the heat –
The stakes for Trump with mass GM layoffs are especially high given the US
president’s vows to revive smaller cities and towns throughout the rust belt
that have suffered job losses that Trump blames on bad trade agreements
negotiated by his predecessor.
Trump raised the heat on Tuesday, taking a shot at GM’s push into overseas
markets, especially China, where it now sells more vehicles than in the
United States.
“General Motors made a big China bet years ago when they built plants
there (and in Mexico) – don’t think that bet is going to pay off,” he said on
Twitter. “I am here to protect America’s Workers!”
The company denied any production of vehicles meant for the US market was
being sent overseas.
Despite the political blowback, GM shares finished up nearly five percent
on Monday, with many analysts praising the cuts as necessary due to weak
demand for sedans and expectations of slowing sales in the US overall.
But GM shares fell sharply after Trump’s tweets, closing down 2.6 percent
at $36.69.
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