Keeping the economy safe from Trump’s feelings
President Donald Trump can’t say he wasn’t warned about General Motors.
In June, GM said that the various tariffs that Trump had either already imposed or was considering could “lead to less investment, fewer jobs, and lower wages for our employees.” These tariffs, the company said, risked “undermining GM’s competitiveness against foreign auto producers.”
Now GM has announced that it will lay off 14,000 workers and close five plants in North America. While the tariffs are not the only or even the principal cause of these declines, the company’s condition ought to make Trump think twice about the wisdom of the trade policies he has been pursuing.
Instead, he has been railing against GM. He said that it is “playing around with the wrong person”—namely him—and that the company “better damn well” open a new Ohio plant. And what if it doesn’t? Trump threatened GM with the loss of subsidies for its electric cars.
The episode illustrates some chronic features of this presidency that have on balance undermined its effectiveness and could undermine the country’s economy, too.
First, Trump tends to make policy spasmodically. GM made a decision that angered him, and he lashed out in public. The same things he is. But the president keeps adding to his reputation for making idle threats, and even self-canceling ones.
This is an example. Congress is not going to cancel the tax credits for electric vehicles, or take any other action against GM, to satisfy Trump’s demand for vengeance against the company. It’s not going to do it in the lame-duck session, when Republicans are still in charge of both chambers, and it is certainly not going to do it when Democrats take the House in a few weeks.
Perhaps there are steps the administration could take on its own against GM. But nearly any change in regulation or grant-making designed to put the company at a disadvantage could be challenged in court on the ground that nakedly targeting a company for retribution is a violation of constitutional due process and other legal protections. Trump, by announcing his goals in public, has made any such action harder to defend.
Second, Trump (in common with other modern presidential candidates) overestimates the powers of the presidency. He speaks as though he believes that companies will change their strategies on a presidential say-so. They won’t, and he may not even be able to make them sorry for ignoring his bluster.
Third, the distinction Trump’s supporters sometimes draw between his words and his actions does not really hold up. The tweets may sometimes be boorish, they say, but the policies are sound. Trump’s words can have an effect, however, even when he is announcing policies that will never come to be. His shots at GM did at least momentary damage to the company’s stock price.
And, fourth, they may do some more lasting if subtler damage. Other presidents have doubtless been upset by corporate decisions but have responded in a more considered way rather than broadcasting their passing thoughts. There is a norm against presidents’ bashing individual American companies, and that norm, like other norms the president does not appreciate, exists for good reasons.
It undergirds the rule of law and the free-enterprise system, related goods that have contributed powerfully to Americans’ livelihoods. In no country can businessmen make decisions with no regard at all for what political leaders think. In this country they have been able to make decisions with relatively little regard.
That arrangement has generally worked out well for us. It would be a mistake to discard it, especially to discard it thoughtlessly.
We may sympathize with the president’s feelings about GM right now. But we should be happy about how little presidents’ feelings have mattered in our country’s economic life—and hope that it stays that way.