Trump threatens to end subsidies to GM for electric cars over layoffs

Virginia Carson
November 28, 2018

President Trump threatened to cut subsidies for General Motors, in retaliation for the carmaker's decision to idle five North American auto plants and lay off some 14,000 workers.

Trump angrily referred to the 2008 federal auto bailout by adding that "the USA saved General Motors, and this is the THANKS we get!"

Kudlow said the Trump administration will be looking into subsidies for "electric cars and others".

Trump criticized GM for not closing facilities in Mexico or China on Twitter.

As unmistakable as the coming future is, it's still a relatively long way off for an industry that still manages to sell more than 19 million vehicles in North America each year.

General Motors To Close Ohio Plant, Thousands Affected

GM shares jumped after the announcement, closing up 4.8 per cent on the day.

Most of the factories to be affected by GM's restructuring build cars that won't be sold in the USA after next year. The company also plans to stop building several models now assembled at those plants, including the Chevrolet Cruze, the Cadillac CT6 and the Buick LaCrosse. The company has sold about 22,000 through September and in August sought an exclusion from 25 percent USA tariffs imposed on Chinese vehicle imports.

Trump, who promised repeatedly during his 2016 election campaign to revitalise job creation in the U.S. industrial heartland and promote domestic automaking, only mentioned the closure of the plant in OH, one of the key states on the USA electoral map and one that helped ensure his victory in 2016.

"(Trump) believes - as, frankly the prime minister of Canada, (Justin) Trudeau, believes - that the USMCA deal was a great help to the automobile industry and to auto workers", Kudlow told a White House briefing.

"We're taking these actions while the economy is strong", Barra told reporters in Detroit.

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The plant in Lordstown, Ohio, that makes the Chevrolet Cruze compact vehicle is on the possible closure list.

Congressman Bill Johnson said he was very disappointed about GM's decision to close the plant, but was hopeful for the future. In the meantime, external forces-particularly, China, GM's largest market-have dented GM's bottom line, wiping out much of the company's savings from the GOP tax reform. Ford, whose third-quarter sales in China dropped 43 percent from a year ago, estimated that the tariffs would cost the company at least $1 billion in lost profits by the end of 2019.

In a statement, GM said that the company was "committed to maintaining a strong manufacturing presence in the US, as evidenced by our more than $22 billion investments in USA operations since 2009".

At the factories, 3,000 workers could lose jobs in Canada and another 3,600 in the US.

"I implore President Trump to keep his word when he came to the Mahoning Valley past year and promised jobs were 'all coming back".

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In total, GM's North American salaried workforce will shrink by 15 percent (8,000 jobs).

Tesla Inc. has already reached the cap and GM is expected to be next.

"It was a myth to say that the USMCA was going to save all these auto jobs, and it's a myth to say that the USMCA caused these closures", Ujczo said. GM curtailed manufacturing operations in South Korea earlier this year, and the idling of the Oshawa plant had been widely reported in the Canadian press as under discussion.

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