Yesterday, General Motors announced layoffs of some 14,000 employees and plant closures along with the news that it won’t continue making six sedan models. President Donald Trump is not happy about the announcement, and he threatened to cut government subsidies to the United States automaker.
In his typical fashion, Trump took to Twitter to express his displeasure. Over a series of two tweets, the POTUS tweeted, “Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan, and Maryland. Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including…”
He went on “…for electric cars. 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. I am here to protect America’s Workers!”
Trump economic adviser Larry Kudlow also called the GM announcement “a great disappointment,” but he also pointed to the recent jobs report of 250,000 new jobs.
According to a Bloomberg report, GM’s stocks fell by 3.8 percent after the tweet, which wiped out yesterday’s gains. However, several on Capitol Hill felt skeptical that Trump would make good on his threat. The subsidies that Trump might mean are the $7,500 federal tax credit that consumers can get when they purchase eligible electric vehicles, which include the Chevy Volt.
President Trump is threatening to cut subsidies for General Motors in retaliation for the company's announcement that it would lay off 14,000 workers.
But it's not clear Trump has the authority to do that. https://t.co/ZoblpvrewN
— NPR Politics (@nprpolitics) November 27, 2018
Of course, the Volt is one of the cars on GM’s chopping block. Eliminating such a subsidy would hurt consumers as well as the automaker. GM, Tesla Inc., and Nissan Motor Co. are lobbying to get the allowance extended. The goal is to raise the cap on the EVs eligible for federal tax credits or somehow extend the credit that is currently available.
South Dakota Senator John Thune told reporters, “I don’t know that’s going to be a response that actually gets much traction around here. I’m not sure I know how they would go about doing that.”
During a briefing, White House Press Secretary Sarah Huckabee Sanders admitted there’s not a specific timeline for the president’s threat, but he is looking into how removing the subsidies would work.
GM’s layoffs and closures come as part of an effort to cut $6 billion in costs by 2020. It will no longer make the Chevy Volt, Impala and Cruze, or the Cadillac CT6, which are sedans with lower sales. Instead, the vehicle manufacturer plans to focus more on Trucks, SUVs, and crossovers.