President Trump suggests measures to protect domestic auto production

Marcus Newton
December 1, 2018

"We are now looking at cutting all @GM subsidies, including.for electric cars", he wrote in two Tuesday afternoon tweets.

Trump's harsh words rattled investors, who bid down GM shares by 2.6 per cent on Tuesday after sending them up on Monday in response to the automaker's cost-cutting.

And, referring to the 2008 federal bailout of the auto industry, Trump angrily continued that "the USA saved General Motors, and this is the THANKS we get!"

The wrath of the leaders of the United States and Canada dramatized the challenges GM and its Detroit rivals will face as they restructure to cope with the most dramatic technology and market shifts in decades.

The U.S. President told reporters at the White House that he had talked to GM CEO Mary Barra and "was very tough" with her.

"Instead of giving companies tax breaks to shut down American factories and lay off workers, why haven't you supported the American Cars American Jobs Act?"

These moves drew the ire of the president, who said, "We have a lot of pressure on them" to maintain operations in places like Lordstown, Ohio - a state key to his re-election.

Senior White House economic adviser Larry Kudlow on June 6, 2018.

Automakers, dealers, and suppliers have come out against any new tariffs, arguing that they would hurt even US-based companies and the US's worldwide competitiveness. In June he threatened Harley Davidson with higher taxes after the motorcycle maker announced it would move some production overseas.

A 25 percent duty on imported light trucks was applied in the 1960s by President Lyndon Johnson in retaliation to West German tariffs on U.S. poultry.

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Trump has not followed up on these threats.

That didn't seem to placate Trump, who famously promised OH supporters their jobs were "all coming back" during a 2017 rally not far from GM's Lordstown facility, where production will grind to a halt in the spring.

While steel jobs may have dwindled, manufacturing - anchored by the General Motors' Lordstown assembly plant - has remained the cornerstone of the local economy.

Trump blasted GM's announcement this week that it will shed up to 14,000 workers in North America.

Here's another problem for Mr. Trump: Any change in the EV credit would have to originate with Congress, which authorizes spending.

The US now provides subsidies to auto buyers of $2,500 to $7,500 for electric vehicles by all automakers depending on the model, and how many have been sold. He said it was "clear" that GM "doesn't respect" the Lordstown workers, and slammed the auto company for not doing enough to reinvest the savings from its tax cuts. GM said the moves are created to prepare the company for a future of driverless and electric vehicles. Killing the subsidies may have little financial impact on GM because it is on the cusp of reaching its subsidy limit. Tesla hit the cap in July. "We're not going to rest until GM fills every plant in the country that's idled with work and workers".

"As the president has repeatedly noted, China's aggressive, state-directed industrial policies are causing severe harm to U.S. workers and manufacturers", Mr Lighthizer said.

For Mr Trump in particular, the cuts are a blow, as he has made rebuilding the U.S. auto industry one of his administration's priorities. Making auto imports 25% more expensive would be a huge price hike for consumers, who probably wouldn't pay the new tax. The company kept the plant open after receiving millions in state subsidies. It is called the 'chicken tax, ' " Trump said on Twitter.

Separately, US trade representative Robert Lighthizer said he was examining options to raise US tariffs on Chinese vehicles to 40% - the level Beijing charges on US-made cars.

Other reports by MaliBehiribAe

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