Trump threatens to cut GM subsidies
WASHINGTON — President Donald Trump on Tuesday threatened to end consumer subsidies for electric cars sold by General Motors in the wake of the company’s announcement of layoffs and plant closures in Michigan, Ohio and Maryland.
In two tweets Tuesday afternoon, Trump said he was “very disappointed” in GM and its chief executive officer, Mary Barra, for the closings.
U.S. factories that could be closed include assembly plants in Detroit; Lordstown, Ohio; as well as transmission plants in Warren, Mich., and one near Baltimore. Also on the list is an assembly plant in Oshawa, Ontario.
But it was unclear what steps Trump could take to punish GM — and whether he could unilaterally reduce subsidies, which are largely limited to those for electric cars — though the federal government has hundreds of millions of dollars of contracts and other arrangements with the company he could potentially affect.
As an incentive to purchase electric cars, the Internal Revenue Service provides an upfront credit of up to $7,500 for a new vehicle, available to each automaker until it sells 200,000 qualified vehicles, after which time the credit begins to phase out. GM is expected to cross that 200,000 threshold sometime before the end of the year. GM has asked for an extension, however.
Much of the government funding for the company is determined by acts of Congress, and the president’s threat raises questions about whether his administration could move to limit GM’s subsidies without affecting
those due other automakers.
“Nothing being closed in Mexico & China,” Trump tweeted. “The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all GM subsidies, including for electric cars.”
Trump also said that GM made what he called “a big … bet” in China some years ago but that he doesn’t “think that bet is going to pay off. I am here to protect America’s Workers!”
On Monday, GM announced cuts involving some 14,000 employees to its workforce nationwide, including about 8,000 white-collar jobs. After talking to Barra, Trump said on Monday afternoon that he was “not happy” about the announced closures and that pressure would be brought to bear on the company.
In his remarks Monday and Tuesday, Trump also referred to the federal government’s $51 billion investment in the company, made during the financial crisis of 2008 and 2009 as steps were taken to keep it and Chrysler from going under. The federal Treasury recouped most of that investment, though about $11 billion
was never repaid.
GM is also a large federal contractor — with contracts in fiscal 2015 worth about $266 million — and also receives tens of millions a year in federal grants, with about $360 million in awards in recent years, including those for research done for the Defense Department and to improve battery technology and other advances.
Later Tuesday afternoon, GM put out a statement saying, “We appreciate the actions this administration has taken on behalf of industry to improve the overall competitiveness of U.S. manufacturing.
“GM is 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,” the statement said. “Yesterday’s announcements support our ability to invest for future growth and position the company for long-term success and maintain and grow American jobs. Many of the U.S. workers impacted by
these actions will have the opportunity to shift to other GM plants where we will need more employees to support growth in trucks, crossovers and SUVs.”
Barra said Monday that the moves were being made to reposition the company at a time of downturn in auto sales overall.
Analysts said they were worried about Trump making such a threat against the company.
“I am very troubled by the president of the United States tweeting such things. Can you imagine the lawsuits Trump would have filed if the government had tried to interfere in his businesses over that last 50 years like he is threatening [here]?” said Jon Gabrielsen, a market economist who advises automakers and auto suppliers.
Trump campaigned heavily in Michigan and across the Midwest in 2016 promising to protect and increase manufacturing jobs, especially those in the auto sector. But on Monday, he took heat, especially from Democrats, who said those promises rang hollow in the wake of GM’s announcement.
Information for this article was contributed by Todd Spangler of the Detroit Free Press, by Tom Krisher of The Associated Press and by Damian Paletta of The Washington Post.